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

Cosmin Ilut, Matthias Kehrig, Martin K. Schneider
Journal of Political Economy. October
2018, Vol. 126, Issue 5, Pages 2011-2071

Concave hiring rules imply that firms respond more to bad shocks than to good shocks. They provide a unified explanation for several seemingly unrelated facts about employment growth in macro-...

Will Gornall, Ilya A. Strebulaev
Journal of Financial Economics. September
2018, Vol. 129, Issue 3, Pages 510-530

We develop a model of the joint capital structure decisions of banks and their borrowers. Bank leverage of 85% or higher emerges because bank seniority both dramatically reduces bank asset...

Journal Article|
Monika Piazzesi
NBER Reporter. June
2018, Issue 2, Pages 1-6

The 2007-09 financial crisis challenged many long-standing beliefs about asset markets. For example, it raised questions about the applicability of the law of one price, it coincided with a period...

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...

Gregor Matvos, Amit Seru, Rui Silva
Journal of Financial Economics. January
2018, Vol. 127, Issue 1, Pages 21-50

We find new facts that relate the evolution of firm scope to the changing frictions in external capital markets over the last three decades. We find that large, diversified publicly...