Money, Banking, and the Financial System, 5th edition

Published by Pearson (June 2, 2026) © 2027
  • Glenn Hubbard
  • Anthony Patrick O'Brien

Title overview

For courses in money and banking.

Making sense of an interconnected financial system

Money, Banking, and The Financial System builds excitement around financial markets, how they’re structured and how they connect to the broader economy. Renowned authors Glenn Hubbard and Tony O’Brien simplify financial developments over the past two decades. They examine changes in monetary policy, borrowing and lending, bank operations, rate fluctuations and regulatory responses.

The 5th Edition analyzes financial events of recent years, such as the pandemic-spurred financial crisis, the highest inflation rates since the 1980s and the highest tariff rates since the 1930s. Supporting cases, exercises, solved problems and review questions were all revised to reflect the modernized content.

Hallmark features of this title

Contextualizing concepts

  • An application framework offers tools for understanding future developments in the financial system.
  • Revised chapter-opening cases provide real-world context for topics, such as whether physical bank branches will disappear.
  • Revised Apply the Concepts features (2-4 per chapter) help students interpret news stories, many focused on pressing policy issues.

Revised application activities

  • Solved Problems offer a step-by-step breakdown to support economic problem-solving.
  • Real-Time Data Analysis Exercises (at least 2 per chapter) familiarize students with the latest data from FRED, the online macroeconomic data bank of the Federal Reserve Bank of St. Louis.
  • Review Questions and Problems and Applications are grouped by learning objective.

New and updated features of this title

Federal Reserve spotlight

  • REVISED: Major revisions to Chapters 14 and 15 reflect challenges faced by the Fed in responding to high interest rates and in adapting to an abundant-reserves regime.
  • NEW: The Fed’s response to tariffs is examined, especially its response to the economic effects.
  • NEW: The continuing debate over the Fed’s structure and operation is discussed in the context of the current US political climate.

Fintech developments

  • NEW: The impact of generative AI on most aspects of the financial system is extensively covered in the new edition.
  • NEW: The increasing importance of fintech and other alternative funding methods, both for business startups and for household financing purchases, is discussed at length.
  • NEW: Developments in modernized payment systems, particularly progress toward a real-time payments system, are considered against recent financial developments.

Key features

Features of MyLab Economics for the 5th Edition

  • NEW: AI-powered study tool draws on Pearson content to turn homework mistakes into teachable moments.
  • GapFinder & GapFiller let you assess what students do and don’t know and then recommend modules for building mastery.
  • NEW: Animated graphs help students evaluate shifts in curves and changes in equilibrium values, while Social Explorer technology lets students engage with interactive graphs.
  • UPDATED: Real-time Data Analysis Exercises support the use and interpretation of the latest FRED data.
  • Homework and practice exercises in MyLab are correlated to the exercises in the text. They regenerate algorithmically, enabling unlimited opportunity for practice and mastery.
  • Micro- and macroeconomic news stories are posted weekly to MyLab. Complementary exercises, which are assignable and auto graded, help students apply economic concepts to current events.

Features of Pearson eTextbook for the 5th Edition

  • NEW: AI-powered study tool gives students access to an expert chatbot for personalized support, simplified explanations and guided practice.
  • NEW: Videos and animations bring key concepts to life, helping students place what they are reading into context. This includes animated graphs, which use real-time data from FRED.

Table of contents

PART 1: FOUNDATIONS

  1. Introducing Money and the Financial System
  2. Money and the Payments System
  3. Interest Rates and Rates of Return
  4. Determining Interest Rates

PART 2: FINANCIAL MARKETS

  1. The Risk Structure and Term Structure of Interest Rates
  2. The Stock Market, Information, and Financial Market Efficiency
  3. Derivatives and Derivative Markets
  4. The Market for Foreign Exchange

PART 3: FINANCIAL INSTITUTIONS

  1. Transactions Costs, Asymmetric Information, and the Structure of the Financial System
  2. The Economics of Banking
  3. Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions
  4. Financial Crises and Financial Regulation

PART 4: MONETARY POLICY

  1. The Federal Reserve and Central Banking
  2. The Federal Reserve’s Balance Sheet and the Money Supply Process
  3. Monetary Policy
  4. The International Financial System and Monetary Policy

PART 5: THE FINANCIAL SYSTEM AND THE MACROECONOMY

  1. Monetary Theory I: The Aggregate Demand and Aggregate Supply Model
  2. Monetary Theory II: The IS-MP Model

Author bios

About our authors

Glenn Hubbard is dean emeritus and Russell L. Carson Professor of Finance and Economics in the Graduate School of Business at Columbia University and professor of economics in Columbia’s Faculty of Arts and Sciences. He is also a research associate of the National Bureau of Economic Research and a director of Black Rock Fixed-Income Funds, MetLife and TotalEnergies. He received a PhD in economics from Harvard University in 1983. From 2001 to 2003, he served as chair of the White House Council of Economic Advisers and chair of the OECD Economic Policy Committee, and from 1991 to 1993, he was deputy assistant secretary of the U.S. Treasury Department. He currently serves as co-chair of the nonpartisan Committee on Capital Markets Regulation. Hubbard’s fields of specialization are public economics, financial markets and institutions, corporate finance, macroeconomics, industrial organization and public policy. He is the author of more than 100 articles in leading journals, including American Economic Review, Brookings Papers on Economic Activity, Journal of Finance, Journal of Financial Economics, Journal of Money, Credit, and Banking, Journal of Political Economy, Journal of Public Economics, Quarterly Journal of Economics, RAND Journal of Economics and Review of Economics and Statistics. His research has been supported by grants from the National Science Foundation, the National Bureau of Economic Research and numerous private foundations.

Anthony Patrick O’Brien is a professor of economics at Lehigh University. He received a PhD from the University of California, Berkeley, in 1987. He has taught principles of economics for over 20 years, in both large sections and small honors classes. He received the Lehigh University Award for Distinguished Teaching. He was formerly the director of the Diamond Center for Economic Education and was named a Dana Foundation Faculty Fellow and Lehigh Class of 1961 Professor of Economics. He has been a visiting professor at the University of California, Santa Barbara, and the Graduate School of Industrial Administration at Carnegie Mellon University. O’Brien’s research has dealt with issues such as the evolution of the US automobile industry, the sources of US economic competitiveness, the development of US trade policy, the causes of the Great Depression and the causes of Black–White income differences. His research has been published in leading journals, including American Economic Review, Quarterly Journal of Economics, Journal of Money, Credit, and Banking, Industrial Relations, Journal of Economic History and Explorations in Economic History. His research has been supported by grants from government agencies and private foundations.

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