Centre for Analytical Finance at ISB


Centre for Analytical Finance at ISB 

 



 

The Centre for Analytical Finance (CAF) was set up at the Indian School of Business in 2004. CAF aims to fulfil one of the school’s key principles – that cutting-edge research in finance is crucial to high-quality management education. CAF’s mandate is to drive research in the field of finance not just by publishing high-quality research papers, but also by creating research databases, training analysts and research associates, and organizing workshops and conferences.

The board members of CAF include academicians, policy makers and members of international think tanks as well as national and international financial institutions.

Research at CAF: Researchers at CAF collect data, test hypotheses and produce policy recommendations. In partnership with the National Stock Exchange (NSE), India, CAF has set up a Trading Laboratory at the ISB campus in Hyderabad. The lab pursues research in securities trading, investment and asset management and provides data for research projects undertaken by ISB faculty.

Investor Education: In order to help corporate professionals, researchers and students understand finance, CAF launched courses on an online platform called Coursera. Topics covered include financial markets and investment strategy.  CAF also plans to offer a course on trading strategies in emerging markets. The initiative has proved successful, with 27,145 visitors, 5,052 active learners and 913 enrolments.

Emerging Market Research: CAF researchers are working on projects that focus on a diverse range of issues, including the impact of government intervention in debt contracts, agency problems in banks, and investor behaviour in stock markets. The research papers produced at CAF have been accepted and presented at top-ranked conferences of the American Finance Association, Western Finance Association and University of North Carolina (UNC) and Duke University among others. Many papers are under consideration at leading finance academic journals for possible publication.
 
Building Unique Databases: Data authenticity is a serious challenge, especially in emerging economies. CAF creates data sets to help and benefit academicians as well as practitioners. Important sources of data include banks, stock exchanges, rating agencies, government departments and other financial institutions. The centre has created several unique data sets, some of which are mentioned below:

 

  • Database on finance, growth and inequality.
  • NSE & BSE tick by tick trading data with investor identity.
  • Farmers-loan account level for three Indian states database.
  • Fama-French factor.
  • Piotroski factors.
  • Debt recovery tribunal (DRT) database.
     
  • PMJDY (financial inclusion) data collection is under process.

 
Training Researchers: Each year, CAF recruits one or two bright and motivated recent graduates as researchers. While at CAF, they are trained in finance and econometrics, develop a solid grounding in theoretical and applied finance, and work on research. The training allows them to work with faculty to produce high-quality research and prepares them for admission to doctoral (or equivalent) programmes at the world's premier business schools. The programme helps researchers build their skills in order to help them gain admission into a fiercely competitive field that often sees acceptance rates as low as 1-2%. CAF researchers have made it to top schools such as Massachusetts Institute of Technology,, NYU Stern School of Business, The University of Chicago, Kellogg School of Management, London Business School, University of Michigan and HKUST Business School.
 
Dissemination through conferences and media: CAF conducts workshops and conferences every year in order to bring together a diverse array of opinions and encourage the sharing of knowledge. Every year, CAF holds a summer research conference in the area of corporate finance and invites papers that link corporate finance to other areas in finance. The conference is widely attended and recently attracted participants from over 20 countries. More than 40% of the papers presented at the conference are published in top-tier journals.
 
CAF produces media articles for Livemint, Times of India and Financial Express on finance, economics and political economic issues. CAF was recognised for its work and has received prestigious international grants such as the IGC grant, IGIDR NSE grant, NSE NYU India initiative grant and E&Y grant for its research engagements. The CAF conference has been funded by grants from Goldman Sachs Foundation, Citi Foundation and NSE India.
 
In its 13 years of existence, CAF has emerged as a premier research centre by making significant contributions to the areas of finance and economics. CAF plans to build its research base further by hosting researchers of global repute and facilitating collaborative research by building its data resources and analytical capabilities.


This article has been written by 
Mohan Ramanath, Analyst at Centre for Analytical Finance, ISB.