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Raghuram Rajan Wins Deutsche Bank Prize in Financial Economics

February 08, 2013

Professor is second from Booth to win, following Eugene Fama in 2005

Raghuram Rajan, the Eric J. Gleacher Distinguished Service Professor of Finance at the University of Chicago Booth School of Business, has been awarded the Deutsche Bank Prize in Financial Economics 2013.

Winners of the Center for Financial Studies’ biennial award are chosen by a jury of financial research and practice experts. Rajan will be presented with the award September 26 in Frankfurt, Germany. The award is presented with Goethe University Frankfurt, and the Deutsche Bank Donation Fund provides the 50,000 euro endowment.

Rajan, the chief economic adviser in India’s Finance Ministry, is the second Booth professor to receive the Deutsche Bank award. Eugene Fama, Robert R. McCormick Distinguished Service Professor of Finance, won the inaugural prize in 2005. Other winners include Michael Woodford, a professor of political economy at Columbia University, in 2007; Robert J. Shiller, professor of economics at Yale University and professor of finance at Yale School of Management, in 2009; and Kenneth Rogoff, professor of economics and of Public Policy at Harvard University in Cambridge, in 2011.

“I am honored, of course,” Rajan said. “It is a prize first won by Gene Fama, followed by Shiller, Woodward and Rogoff. These are people I admire greatly, and with any such honor, you have doubts about whether you belong in such an elite group. So it is also a humbling experience.”

The Center for Financial Studies cited Rajan’s original and diverse influence on the field of financial economics.

“Raghuram G. Rajan’s work spans a remarkably broad range of areas in financial economics most important to the development of economies worldwide,” Michael Haliassos, jury chairman and CFS director, wrote in a release. “This includes the impact of financial development on growth, banking and financial crises, as well as corporate finance and governance. His work develops novel empirical and theoretical approaches with significant policy implications.”

Rajan said that with a large number of deserving candidates it is hard to discern what set him apart. “From the citation, I would guess it is my work on the financial crisis, overlaid on two decades of academic work with a number of co-authors from the school and elsewhere,” he added.

The Center for Financial Studies also cited Rajan’s warning in a 2005 speech at an annual gathering of economists in Jackson Hole, Wyoming, about the risks of financial developments and a looming financial disaster. Rajan told the Wall Street Journal in 2009 that he had started his research for “Has Financial Development Made the World Riskier?” intending to show the positives of financial developments, but found the opposite.

“Rajan’s penetrating analysis of the changing growth experience during the postwar era and of the differences in the nature of the crises faced by the United States and by Southern Europe is essential reading for understanding the current policy dilemmas between austerity and growth facing both sides of the Atlantic,” the Center wrote.

Rajan started teaching at Booth in 1991. He served as economic counselor and director of research at the International Monetary Fund between 2003 and 2006, was chairman of the High Level Committee on Financial Sector Reforms in India in 2007 and 2008, and was an honorary economic adviser to Prime Minister Manmohan Singh between 2008 and 2012. In 2011, Rajan was the president of the American Finance Association. He is a member of the American Academy of Arts and Sciences, and, in 2003, Rajan won the inaugural Fischer Black Prize awarded by the American Finance Association to the best financial economist younger than 40.

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