Finance

Finance is an applied branch of economics that studies the ways in which individuals, business entities, and other organizations allocate resources over time and make decisions in the presence of uncertainty.

The faculty in the finance area have wide-ranging expertise in all major areas of finance, including:

  • Asset pricing, or how security prices and interest rates are determined in the market.
  • Corporate finance, or how corporations raise capital and make investment decisions.

The faculty strive to produce a broad range of finance-related research that addresses topics of interest to academic researchers, practitioners, and policymakers. We communicate that research both through publication in scientific journals, and through the development of relevant and rigorous MBA and Executive Education programs. We also train and mentor future finance scholars through our PhD Program, which is regarded as one of the top finance doctoral programs worldwide.

Recent Journal Articles in Finance

Francesco Bianchi, Cosmin L. Ilut, Martin K. Schneider
The Review of Economic Studies. April
1 , 2018, Vol. 85, Issue 2, Pages 810-854

This article estimates a business cycle model with endogenous financial asset supply and ambiguity averse investors. Firms’ shareholders choose not only production and investment, but also capital structure and payout...

Antje Berndt, Rohan Douglas, Darrell Duffie, Mark Ferguson
Review of Finance. March
1 , 2018, Vol. 22, Issue 2, Pages 419-454

We measure credit risk premia—prices for bearing corporate default risk in excess of expected default losses—using Markit CDS and Moody’s Analytics EDF data. We find dramatic variation over time in...

Arvind Krishnamurthy, Stefan Nagel, Annette Vissing-Jorgensen
Review of Finance. February
1 , 2018, Vol. 22, Issue 1, Pages 1-44

We evaluate the effects of three European Central Bank (ECB) policies (the Securities Markets Programme (SMP), the Outright Monetary Transactions (OMT), and the Long-Term Refinancing Operations (LTROs)) on government bond...

Benjamin Golez, Peter A.E. Koudijs
Journal of Financial Economics. February
2018, Vol. 127, Issue 2, Pages 248-263

We combine annual stock market data for the most important equity markets of the last four centuries: the Netherlands/U.K. (1629-1812), U.K. (1813-1870) and U.S. (1871-2015). We show that dividend yields...

Jennie Bai, Arvind Krishnamurthy, Charles-Henri Weymuller
The Journal of Finance. February
2018, Vol. 73, Issue 1, Pages 51-93

This paper constructs a liquidity mismatch index (LMI) to gauge the mismatch between the market liquidity of assets and the funding liquidity of liabilities, for 2,882 bank holding companies over...

Anat R. Admati, Peter M. DeMarzo, Martin F. Hellwig, Paul Pfleiderer
The Journal of Finance. February
2018, Vol. 73, Issue 1, Pages 145-198

Firms’ inability to commit to future funding choices has profound consequences for capital structure dynamics. With debt in place, shareholders pervasively resist leverage reductions no matter how much such reductions...

Arvind Krishnamurthy, Zhiguo He, Konstantin Milbradt
American Economic Review (forthcoming).
2018

What makes an asset a “safe asset”? We study a model where two countries each issue sovereign bonds to satisfy investors’ safe asset demands. The countries differ in the float...

Journal Article|
Shai Bernstein, Emauele Colonnelli, Xavier Giroud, Benjamin Iverson
Journal of Financial Economics (forthcoming).
2018

How do different bankruptcy approaches affect the local economy? Using U.S. Census microdata, we explore the spillover effects of reorganization and liquidation on geographically proximate firms. We exploit the random...

Darrell Duffie, Lei Qiao, Yeneng Sun
Journal of Economic Theory.
2018, Vol. 143, Pages 124-183

We develop a general and unified model in which a continuum of agents conduct directed random searches for counterparties. Our results provide the first probabilistic foundation for static and dynamic...

Zhiguo He, Arvind Krishnamurthy
Annual Review of Financial Economics (forthcoming).
2018

“Intermediary asset pricing” understands asset prices and risk premia through the lens of frictions in financial intermediation. Perhaps motivated by phenomena in the financial crisis, intermediary asset pricing has been...