Darrell Duffie,
Adams Distinguished Professor of Management and Professor of Finance
Stanford Graduate School of Business

Before the failure of Lehman Brothers in 2008, it was generally assumed that systemically important financial institutions (SIFIs) were too big to fail. That is, if a huge bank were to approach insolvency, the government would be almost forced to bail out the bank. The alternative would be to allow the bank to fail, causing catastrophic damage to the economy. In effect, the economy was held hostage, with the situation demanding a ransom of government capital to nationalize the bank and stabilize the economy. During the Great Financial Crisis of 2008-2009, bailouts were frequent, in multiple countries. For example, by investing 46 billion pounds of public money, the U.K government rescued the Royal Bank of Scotland from insolvency. Read More…

We normally hold the PhD Forum at this time of the year, where our PhD candidates and graduates present their research to academics and finance practitioners. The pandemic makes it impossible to meet face-to-face so instead this month’s PhD in Finance Newsletter shares the research findings of five of our PhD candidates and graduates. We are extremely grateful to Professor Darrell Duffie for agreeing to write the editorial and to be the keynote speaker at our next PhD Forum that will be held in London in May 2021. Read More…