Finance is the study of how economic resources are channeled through time, across business activities, and around the globe to help individuals and institutions manage their affairs more effectively. Finance has become the universal language of commerce—cutting across industries, countries, and circumstances—and is now an indispensable tool for fueling innovation and economic growth, planning for retirement, and managing risk. If used improperly, finance can also be a source of misaligned incentives and systemic risk. The stakes have never been higher.
The MIT Sloan Finance Group is dedicated to conducting rigorous and relevant research in finance, educating a broad range of students and executives in the latest financial models and methods, and advising regulators and policymakers on finance-related policy issues. With 21 full-time tenure-track and 16 affiliated faculty members, the MIT Sloan Finance Group covers a broad range of research interests including corporate finance, consumer finance, risk management, international finance, derivative securities, financial engineering, asset management, and behavioral finance. Educational programs include the MBA Finance Track, the Master of Finance, and the Finance PhD program, while the Laboratory for Financial Engineering, the MIT Golub Center for Finance and Policy provide opportunities for faculty and students to engage in joint research and teaching activities.
Through innovative academic programs, a wide selection of course offerings, and groundbreaking research, the MIT Sloan Finance Group is committed to its role as a world leader in financial thought and education.
About the MIT Sloan Finance Group
The MIT Sloan Finance Group was founded in the late 1960s, long before many other business schools recognized finance as a distinct field of study. Thanks to the intellectual contributions of Paul A. Samuelson and the academic leadership of Professor William Pounds, who was dean of MIT Sloan from 1966 to 1980, the Finance Group coalesced into an influential collection of scholars with a common interest.
Members of this academic unit became the pioneers of modern finance, including Fischer Black, John Cox, Stewart Myers, and Nobel Laureates Bengt Holmström, Robert Merton, Franco Modigliani, and Myron Scholes. Many breakthroughs in financial economics are associated with MIT faculty, including: the Black-Scholes/Merton option-pricing model; the Modigliani-Miller theorems; continuous-time models of consumption and portfolio choice; applications of option-pricing theory to real investments, corporate finance, and other real options; equilibrium models of the term structure of interest rates; binomial option-pricing; and the risk-neutral pricing kernel for pricing derivative securities.
Today’s Finance Group is continuing this legacy of excellence and thought leadership. The finance research program spans all of the sub-disciplines that financial economics has produced over the last four decades, including: corporate finance; the implementation of financial asset pricing models; the pricing of options and other derivative securities; economics of organizations; and the characterization of financial risks.
Finance Group teaching activities include courses in the MBA program, Master of Finance program, MIT Sloan Fellows program, MIT Executive MBA Program, the undergraduate program, as well as other programs and collaborations with organizations and universities around the world.
Fisher Black Chair
The Fischer Black Visiting Professorship of Financial Economics is an endowed chair for visiting faculty named in memory of Professor Fischer Black, an MIT Sloan Finance Group faculty member from 1975 to 1984. Black was one of the most influential finance academics of all time, and—as co-author of the Black-Scholes option-pricing formula—became an icon on Wall Street as well as in academia. His remarkable life and works are chronicled in the biography by Perry Mehrling, Fischer Black and the Revolutionary Idea of Finance (Wiley, 2005).
The Fischer Black Chair has a unique mandate structured by his friends and colleagues to honor his iconoclastic style, which is described in the following passage taken from the letter informing him of this chair:
The holders will be first-rate minds whose contributions are either in finance directly or in the applications of finance principles to the analysis of general economics. Holders of the Chair should exemplify the research qualities of its eponym: originality, curiosity, dedication to scholarship, intellectual honesty, and the courage to challenge the status quo. The holder's work should demonstrate a commitment to the fundamental thesis that good research influences good practice. Reflecting your own career, successive holders of the Chair are expected to come from both the academic and practitioner communities.
The choice of a visiting instead of a permanent professorship is intended to encourage the development and exchange of new ideas and perspectives in finance. It will also help MIT specifically, and the profession more generally, to avoid intellectual in-breeding and stagnation. The Chair-holders will have no regular teaching responsibilities. Instead they will be expected to give a series of lectures on topics of special interest and be a general intellectual resource for the MIT faculty. As you have done for so many of us, Chair-holders should offer detailed and critical comments on the finance faculty's research.
Robert Merton and Myron Scholes summarized the reaction of Fischer Black (Journal of Finance, December 1995) to this unique chair in the following way:
On receiving this tribute, Fischer, in his typically modest way, expressed “stunned” surprise that his friends and colleagues chose to honor his contributions. He was clearly overjoyed at the tribute. Fischer was especially touched that the details of the three parts—the visiting professorship, the prize, and the commentaries on his contributions—so closely captured his values about science. As he put it, “Someone out there seems to know me! … I hope it helps to spread my enthusiasm for finding useful truths.” … This is the way he wanted to be remembered.
Holders of the Fischer Black Visiting Chair in Financial Economics include:
- John Campbell
- Raghu Rajan
- Douglas Breeden
- Douglas Diamond
The S. Donald Sussman Award
The S. Donald Sussman Award is presented to individuals or groups who best exemplify Donald Sussman’s career as a successful investor in quantitative investment strategies and models.
The award is named after S. Donald Sussman. Sussman has worked in alternative investments for more than 30 years and manages funds that focus on both quantitative and fundamental strategies. He is the founder of Trust Asset Management, the Paloma Funds, and New China Capital Management LLC. He was the recipient of Institutional Investor’s Alternative Investment News Lifetime Achievement Award in 2004. Sussman is a member of the Board of Trustees and Executive Committee, and co-chair of the Investment Committee of Carnegie Hall. He attended Columbia College and received a B.S. and an MBA from New York University.
S. Donald Sussman lecturers receive a $100,000 cash prize and share their insights on quantitative finance and the financial industry through three public lectures to be delivered at MIT Sloan during the year of the award.At the event honoring the establishment of the Award, MIT Sloan Dean David Schmittlein noted that the award is an “important resource for recognizing excellence in finance at MIT and very broadly in the world.”
Previous recipients of the S. Donald Sussman Award include:
- Robert Litterman
- Robert C. Merton
- James Simons
MIT Sloan’s position at the vanguard of management practice results from a culture of collaboration. The School fulfills its mission through the collective contributions and expertise of each and every member of its diverse community—a community energized by talented individuals from around the globe.
In addition to MIT Sloan-dedicated resources, MIT Sloan faculty and staff also have access to the benefits and resources available to the wider MIT community. Cited for its progressive and rewarding work environment, MIT has been honored by organizations and media outlets as one of the best employers in the country.