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Finance

Finance

  • Faculty
  • Curriculum
  • Seminars & Conferences
  • Awards & Honors
  • Doctoral Students
Overview Faculty Curriculum Seminars & Conferences Awards & Honors Doctoral Students
    • November 2023
    • Article

    A Quantity-Driven Theory of Term Premia and Exchange Rates

    By: Robin Greenwood, Samuel G. Hanson, Jeremy C. Stein and Adi Sunderam

    We develop a model in which specialized bond investors must absorb shocks to the supply and demand for long-term bonds in two currencies. Since long-term bonds and foreign exchange are both exposed to unexpected movements in short-term interest rates, a shift in the supply of long-term bonds in one currency influences the foreign exchange rate between the two currencies, as well as bond term premia in both currencies. Our model matches several important empirical patterns, including the co-movement between exchange rates and term premia, as well as the finding that central banks' quantitative easing policies impact exchange rates. An extension of our model links spot exchange rates to the persistent deviations from covered interest rate parity that have emerged since 2008.

    • November 2023
    • Article

    A Quantity-Driven Theory of Term Premia and Exchange Rates

    By: Robin Greenwood, Samuel G. Hanson, Jeremy C. Stein and Adi Sunderam

    We develop a model in which specialized bond investors must absorb shocks to the supply and demand for long-term bonds in two currencies. Since long-term bonds and foreign exchange are both exposed to unexpected movements in short-term interest rates, a shift in the supply of long-term bonds in one currency influences the foreign exchange rate...

    • September 2023
    • Case

    Breaking Barriers: How Brex is Shaping the Future of Financial Services for Startups

    By: Marco Di Maggio, James Barnett and Susie L. Ma

    • September 2023
    • Case

    Breaking Barriers: How Brex is Shaping the Future of Financial Services for Startups

    By: Marco Di Maggio, James Barnett and Susie L. Ma

    • September 2023
    • Case

    Cost of Capital at DraftKings

    By: Malcolm Baker, Sebastian Hillenbrand and James Barnett

    • September 2023
    • Case

    Cost of Capital at DraftKings

    By: Malcolm Baker, Sebastian Hillenbrand and James Barnett

About the Unit

Our strategy is to assemble and nurture a faculty whose interests and skills complement each other, and who work well together:

a) to produce a broad range of finance-related research that is published in top-tier scientific and practitioner journals, and that addresses issues of present and future importance to managers (including regulators and policy makers);

b) to develop highly-relevant and intellectually rigorous MBA and executive education courses; and

c) to mentor future academics through the Business Economics doctoral program.

Our applied focus and access to business organizations are major advantages which are reinforced by our students and our case-based approach. We have a faculty with broad expertise, and we have resources, field contacts, and institutional support, all of which we can leverage to do richer work and be more productive than we could at other institutions.

Recent Publications

A Quantity-Driven Theory of Term Premia and Exchange Rates

By: Robin Greenwood, Samuel G. Hanson, Jeremy C. Stein and Adi Sunderam
  • November 2023 |
  • Article |
  • Quarterly Journal of Economics
We develop a model in which specialized bond investors must absorb shocks to the supply and demand for long-term bonds in two currencies. Since long-term bonds and foreign exchange are both exposed to unexpected movements in short-term interest rates, a shift in the supply of long-term bonds in one currency influences the foreign exchange rate between the two currencies, as well as bond term premia in both currencies. Our model matches several important empirical patterns, including the co-movement between exchange rates and term premia, as well as the finding that central banks' quantitative easing policies impact exchange rates. An extension of our model links spot exchange rates to the persistent deviations from covered interest rate parity that have emerged since 2008.
Keywords: Term Premium; Exchange Rate; Currency Exchange Rate; Bonds
Citation
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Greenwood, Robin, Samuel G. Hanson, Jeremy C. Stein, and Adi Sunderam. "A Quantity-Driven Theory of Term Premia and Exchange Rates." Quarterly Journal of Economics 138, no. 4 (November 2023): 2327–2389.

Stock Market Stimulus

By: Robin Greenwood, Toomas Laarits and Jeffrey Wurgler
  • October 2023 |
  • Article |
  • Review of Financial Studies
We study the stock market effects of the arrival of the three rounds of “stimulus checks” to U.S. taxpayers and the single round of direct payments to Hong Kong citizens. The first two rounds of U.S. checks appear to have increased retail buying and share prices of retail-dominated portfolios. The Hong Kong payments increased overall turnover and share prices on the Hong Kong Stock Exchange. We cannot rule out that these price effects were permanent. The findings raise novel questions about the role of fiscal stimulus in the stock market.
Keywords: Stock Market; COVID-19 Pandemic; Fiscal Stimulus; Stimulus Payments; Impact; Stocks; System Shocks; Price; Spending; United States; Hong Kong
Citation
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Related
Greenwood, Robin, Toomas Laarits, and Jeffrey Wurgler. "Stock Market Stimulus." Review of Financial Studies 36, no. 10 (October 2023): 4082–4112. (Also NBER Working Paper Series, No. 29827, January 2023.)

Root Capital and the Efficient Impact Frontier Simulation Dataset for Students

By: Shawn Cole
  • September 2023 |
  • Supplement |
  • Faculty Research
Citation
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Related
Cole, Shawn. "Root Capital and the Efficient Impact Frontier Simulation Dataset for Students." Harvard Business School Spreadsheet Supplement 224-710, September 2023.

Root Capital and the Efficient Impact Frontier Simulation: Guidelines and Suggestions

By: Shawn Cole
  • September 2023 |
  • Exercise |
  • Faculty Research
Citation
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Related
Cole, Shawn. "Root Capital and the Efficient Impact Frontier Simulation: Guidelines and Suggestions." Harvard Business School Exercise 224-034, September 2023.

Equity Restructuring at Dell Technologies: Buy Out, Buy Up, Buy In (A)

By: Stuart C. Gilson and Sarah L. Abbott
  • September 2023 |
  • Supplement |
  • Faculty Research
Citation
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Related
Gilson, Stuart C., and Sarah L. Abbott. "Equity Restructuring at Dell Technologies: Buy Out, Buy Up, Buy In (A)." Harvard Business School Spreadsheet Supplement 224-709, September 2023.

Breaking Barriers: How Brex is Shaping the Future of Financial Services for Startups

By: Marco Di Maggio, James Barnett and Susie L. Ma
  • September 2023 |
  • Case |
  • Faculty Research
Citation
Educators
Related
Di Maggio, Marco, James Barnett, and Susie L. Ma. "Breaking Barriers: How Brex is Shaping the Future of Financial Services for Startups." Harvard Business School Case 224-030, September 2023.

Cost of Capital at DraftKings

By: Malcolm Baker
  • September 2023 |
  • Supplement |
  • Faculty Research
Citation
Related
Baker, Malcolm. "Cost of Capital at DraftKings." Harvard Business School Spreadsheet Supplement 224-708, September 2023.

Cost of Capital at DraftKings

By: Malcolm Baker, Sebastian Hillenbrand and James Barnett
  • September 2023 |
  • Case |
  • Faculty Research
Citation
Educators
Related
Baker, Malcolm, Sebastian Hillenbrand, and James Barnett. "Cost of Capital at DraftKings." Harvard Business School Case 224-007, September 2023.
More Publications

In the News

    • 18 Sep 2023
    • Bloomberg

    MBAs Are Spurning McKinsey to Buy Small Companies

    Re: Royce Yudkoff & Richard Ruback
    • 12 Sep 2023
    • HBS Working Knowledge

    How Can Financial Advisors Thrive in Shifting Markets? Diversify, Diversify, Diversify

    Re: Marco Di Maggio
    • 17 Aug 2023
    • HBS Working Knowledge

    ‘Not a Bunch of Weirdos’: Why Mainstream Investors Buy Crypto

    Re: Marco Di Maggio
→More Faculty News

HBS Working Knowledge

    • 12 Sep 2023

    How Can Financial Advisors Thrive in Shifting Markets? Diversify, Diversify, Diversify

    Re: Marco Di Maggio
    • 17 Aug 2023

    ‘Not a Bunch of Weirdos’: Why Mainstream Investors Buy Crypto

    Re: Marco Di Maggio
    • 18 Jul 2023

    Will Global Demand for Oil Peak This Decade?

    Re: Joseph B. Lassiter & Lauren H. Cohen
→More Working Knowledge Articles

Harvard Business Publishing

    • March 2012
    • Article

    How to Make Finance Work

    By: Robin Greenwood and David S. Scharfstein
    • August 2023
    • Case

    Viking Global Investors: Public Heritage, Private Opportunities

    By: Luis M. Viceira, Ryan Gilland, Ashutosh Panchang and Tanner Crouch
    • 2017
    • Book

    HBR Guide to Buying a Small Business: Think Big, Buy Small, Own Your Own Company

    By: Richard S. Ruback and Royce Yudkoff
→More Harvard Business Publishing

Seminars & Conferences

Oct 04
  • 04 Oct 2023

Paul Tetlock, Columbia Business School

HBS Finance Unit/Harvard Economics Department Seminars
→More Seminars & Conferences

Faculty Positions

Harvard Business School seeks candidates in all fields for full time positions. Candidates with outstanding records in PhD or DBA programs are encouraged to apply.
→Learn More

Contact Information

Finance Unit
Harvard Business School
Baker Library | Bloomberg Center
Soldiers Field
Boston, MA 02163
financeunit@hbs.edu

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