Financial Resilience Research Cluster

What does the cluster cover in terms of research?

The main objective of the proposed research cluster is to deliver world class multi-disciplinary research spanning finance & economics and science & engineering to better understand the wide range of complex factors that contributed to the recent financial crisis.

Our research would encompass all aspects of the financial system, from new processes and practices arising from enhanced measurement and model formulation to improved strategies and regulation required to strengthen and protect the financial system from future crises

The name “Financial Resilience” is intended to appeal to Social Scientists and Engineering / Physical Scientists to maximise our scope and potential for breaking new ground in Finance research. The Financial Resilience research cluster provides a unique platform to explore and discuss all aspects of finance research, from formation of new ideas through to policy implementation. Its multi-disciplinary and market-oriented approach offers new perspectives on the underlying dynamics of financial market mechanisms.

Financial Resilience cluster objectives are to:

  • Focus on financial market mechanics as well as inter-market linkages.
  • Broaden areas where corporate governance, regulation and econometric methods converge.
  • Build a research community engaging with practitioners, officials and academics.
  • Serve as a think tank to advise on industry and government actions.

Initial projects may include the following the following themes;

  • Liquidity and the business cycle (Prof Jane Binner, Dr Christoph Görtz, Dr Peter Tino, Computer Science and Prof Richard Anderson, School of Business and Entrepreneurship, Lindenwood, USA)
  • Risk and household sector demand for liquidity (Profs Jane Binner and Andy Mullineux, Drs Paul Cox and Sajid Chaudhry)
  • Multiple sources of leverage as triggers of financial and economic recession (Prof. Robert Cressy)
  • European asset swap spreads and the credit crisis (Prof. Ranko Jelic, Prof. Wolfgang Aussenegg and Dr Lukas Goetz)
  • European ‘fear’ indices – evidence before and after the financial crisis (Prof. Ranko Jelic, Prof. Wolfgang Aussenegg and Dr Lukas Goetz)
  • European syndicated loan and corporate bond markets (Prof. Ranko Jelic and Dr Sajid Chaudhry)
  • Can volatility risk premia predict regime changes in European corporate bond returns? (Prof. Ranko Jelic and Dr XiaoHua Chen)
  • Fiscal consolidation (Professor John Fender)
  • Brains, swarms and the equity premium puzzle, (Drs Amalia Digirolamo, Michalis Drouvelis and Professor Jane Binner)
  • Can liquidity be measured and priced? Topics in Market Microstructure(Prof Patricia Chelley-Steeley, Prof Ranko Jelic, Prof Jane Binner)
  • Topics in corporate finance and corporate governance: measurement, management, regulation and behaviour (Drs Nick Carline, Eilnaz Kashefi Pour, Ping Wang, Hisham Farag, George Georgiou, Afrasiab Mirza, and Mr Kean Ow Yong)

We also have close relationships with key institutions central to the conduct of economic policy and oversight of the financial sector in the UK. Specifically, both Professor Peter Sinclair and Dr Christoph Görtz have developed strong links with the Bank of England as a result of having been employed there in key positions and Dr Paul Cox currently holds a Government Office in Bank of England’s capital market and economic activity procyclicality workgroup. Moreover, as a result of key contacts with policy makers at HM Treasury, we are in a position to inform UK financial policy debates with research that would be performed in the Cluster. Robert Cressy’s links with the British Venture Capital Association enable us to input into policy decisions in the venture capital and private equity area.

We also have strong links and advisory roles within some of the most important research and policy making institutions in finance across the globe (e.g. the Bank of International Settlements (BIS), several central banks, OECD, IMF and Federal Reserve Banks in St Louis, New York and Atlanta). To maximise impact, we will ensure that research conducted in the cluster will inform policy designed by these institutions. We intend to leverage our close links with these international organisations to generate research income, in line with the School’s funding model.

Distinctiveness

Evidence that the cluster will lead to world leading research that is either unique to Birmingham or that Birmingham will be one of the top locations for research in the area. This should include an analysis of competitors and potential to attract world leading faculty to Birmingham.

Following the lingering financial crisis few problems are as important today as speeding up the financial recovery in businesses across the globe. A key to resolving this requires re-thinking the financial architecture of both modern and developing countries alike. The high quality of our staff and our strong international links ensure that Birmingham is uniquely placed to be a centre of excellence to respond to this challenge.

We have succeeded in hiring leading researchers in Financial Economics (Jane Binner, Alessandra Guariglia, Patricia Chelley-Steeley) to complement a small but excellent group of researchers with complementary interests (Robert Cressy, David Dickinson, John Fender, Ranko Jelic, Peter Sinclair and Frank Strobel). Together with the hiring of younger researchers in Finance and Economics (e.g. Christoph Görtz, Afrasiab Mirza), we now have a critical mass of researchers all devoted to exploring how to make our financial systems more resilient across the world.

Birmingham's is distinctive in its ability to bring together leading researchers across the UK, Europe and North America. Specifically, in recent years, members of the proposed cluster have organised an annual conference with world class keynote speakers from the US Federal Reserve, the Bank of England, Oxford and UCLA. In addition, researchers at Birmingham have the opportunity to interact with leading financial policy makers and academics at the Maxwell Fry Global Finance Lecture series (e.g. Lord Mervyn King) as well as the prestigious annual Royal Economic Society Easter School on topics in banking, finance and macroeconomics (hosted by the Business School). Notable economists such as Nobuhiro Kiyotaki (Princeton), Christopher Pissarides (LSE), and Fabio Canova (EUI) have previously taught the Royal Economic Society Easter School.

There is also significant demand for PhD supervision in the research areas of the proposed cluster. This complements the large MSc programmes (e.g. MBF, IMB, MSc Investments, MSc Accounting and Finance, MSc Financial Management) that draw on the staff expertise within the cluster.

There are no comparable research clusters specialising in “Financial Resilience” in the UK. The primary strength of existing research clusters lies either in Finance or Economics but typically not both. Specifically, Surrey, Durham and Glasgow primarily conduct research in macroeconomics while CASS Business School, LBS, Nottingham and the LSE Financial Markets Group are focused on corporate finance and asset pricing. Our broad theme of Financial Resilience provides a unique opportunity to unite these disciplines.

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