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

Barney Hartman-Glaser, Benjamin Hébert
Journal of Finance (forthcoming). February
2020

We model the widespread failure of contracts to share risk using available indices. A borrower and lender can share risk by conditioning repayments on an index. The lender has private...

Arvind Krishnamurthy, Zhiguo He
American Economic Journal Macroeconomics . October
2019, Vol. 11, Issue 4, Pages 1-37
Systemic risk arises when shocks lead to states where a disruption in financial intermediation adversely affects the economy and feeds back into further disrupting financial intermediation. We present a macroeconomic...
Journal Article|
Shai Bernstein, Emauele Colonnelli, Xavier Giroud, Benjamin Iverson
Journal of Financial Economics. September
2019, Vol. 133, Issue 3, Pages 608-633

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...

Rebecca Diamond, Timothy James McQuade, Franklin Qian
American Economic Review. September
2019, Vol. 109, Issue 9, Pages 3365-3394

Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking...

Saumitra Jha, Moses Shayo
Econometrica. September
2019, Vol. 87, Issue 5, Pages 1561-1588

Can participation in financial markets lead individuals to re-evaluate the costs of conflict, change their political attitudes and even their votes? Prior to the 2015 Israeli elections, we randomly assigned...

Peter M. DeMarzo
The Journal of Finance. August
2019, Vol. 74, Issue 4, Pages 1587-1619

Optimal dynamic capital structure choice is fundamentally a problem of commitment. In a standard trade‐off setting with shareholder‐debtholder agency conflicts, full commitment counterfactually predicts the firm would rely almost exclusively...

Samuel Antill, Steven Grenadier
Journal of Financial Economics. July
2019, Vol. 133, Issue 1, Pages 198-224

We model a firm’s optimal capital structure decision in a framework in which it may later choose to enter either Chapter 11 reorganization or Chapter 7 liquidation. Creditors anticipate equityholders’ ex-post reorganization incentives and pricethem into...

Shai Bernstein, Abhishek Dev, Josh Lerner
Journal of Finance Economics (forthcoming). June
2019

This paper explores the creation and evolution of new stock exchanges around the world geared towards entrepreneurial companies, known as second-tier exchanges. Using hand-collected novel data, we document the proliferation...

Hanno Lustig, Adrien Verdelhan
American Economic Review. June
2019, Vol. 109, Issue 6, Pages 2208-2244

We assume that domestic (foreign) agents, when investing abroad, can only trade in the foreign (domestic) risk-free rates. In a preference-free environment, we derive the exchange rate volatility and risk...

Xavier Giroud, Joshua D. Rauh
Journal of Political Economy. June
2019, Vol. 127, Issue 3, Pages 1262-1316

Using Census microdata on multi-state firms and their organizational forms, we estimate the impact of state taxes on business activity. For C corporations, employment and the number of establishments have...