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Stay Ahead of the Next Disruptive Change Through Research-Based Excellence

February 25, 2019 • FINANCE & BANKING, Editor’s Choice, Power Influencers from Business and Academia

As one of the Top 15 business schools in Europe, EDHEC Business School – operating from Paris, Nice, Lille, London and Singapore, has spelled out its educational credo as “professional development through research-based excellence”, and the EDHEC PhD in Finance is the culmination of this ambition.

Today we sat down with EDHEC PhD in Finance Programme Director, Prof. Abraham Lioui, who talked about the unique PhD programme they offer, and the culture of excellence and brand signature that EDHEC adheres to that lets it stay at the forefront of top quality academic research and sets it apart from other business schools i.e. to Make an Impact.

 

Good day, Dr. Lioui! Thank you for taking the time to talk to us today. To start, we would like to know what a day looks like for an academic leader like you?

Fortunately, given the three hats I have, it is very rare that one day resembles the day before or the day after. As the Director of the PhD programme, two activities are particularly demanding but not less enriching: staffing of the core and elective courses as well as performing a quality control of the research output of our students. To stay at the forefront of top quality academic research, we need to adapt permanently the curriculum of the programme to guarantee good training for our students whilst keeping them up to date with the latest developments. To reach this goal, I spend a large portion of my day scanning newly published papers in academic journals as well as working papers platforms. Different from a standard academic degree, thesis submissions in this programme happen on a continuous basis. While it is time demanding to provide useful feedback, it is not less enriching since each thesis is focusing on a different subject. All in all, my activities during the day are diversified but I rarely end a day feeling I wasted time!

 

It is the only PhD programme in the world targeting finance professionals/executives. The PhD programme is the instrument EDHEC has put in place to expose professionals to the most recent academic discoveries but not less to sharpen their critical thinking.”

EDHEC Business School is known for its culture of excellence and brand signature: Make an Impact. Can you tell us more about the attributes/features that set EDHEC apart from other business schools?

The PhD in Finance Programme is an excellent marker of this motto as well as of the unicity of EDHEC. It is the only PhD programme in the world targeting finance professionals/executives. EDHEC does believe that academic advancement may lead to disruptive innovations as well as higher efficiency of markets and institutions. The PhD programme is the instrument EDHEC put in place to expose professionals to the most recent academic discoveries but not less to sharpen their critical thinking. We do believe that professionals are not less capable than young Master graduates of coming up with original ideas and executing them according to the highest academic standards.

 

What excites you most about the PhD in Finance Programme? How do you cultivate a unique design for its curriculum?

The most exciting part of my job is the intellectual challenge. Each year, between 5 and 10 students enter their dissertation stage. To guarantee that an idea is original, one has to master extremely well the literature and obviously be creative. Since I centralise all the research proposals, I spend a lot of time with our students in identifying potentially important and interesting gaps in the literature. To stay original, our system of electives given by top scholars from all over the world works nicely in exposing our students to the most recent literature but not less learning from people with rich experiences and amongst the best experts in their respective field.

 

With the competitive nature of the financial industry, especially in times of intense innovation and globalisation, how do you guarantee the competitiveness of your students and develop them to be the key players in tomorrow’s financial industry?

Innovation is probably the ultimate competitive advantage a firm can think of. The knowledge we pass onto our students is all tailored to have an impact, preferably a quick and strong one, on the industry. Our programme aims to improve the human capital of our students by training them but not less teaching them how to train themselves through constant critical thinking.

 

“The knowledge we pass onto our students is all tailored to have an impact, preferably a quick and strong one, on the industry. Our programme aims to improve the human capital of our students by training them but not less teaching them how to train themselves through constant critical thinking.”

What’s the most challenging when addressing the needs of your participants? How do you meet their expectations and have them better prepared?

There is a permanent discussion with our students during their studies and when they become alumni. We conduct regular surveys to collect feedback on the content of the programme and the potential gaps we need to fill. Following one of these surveys, we created three MOOCS on programming languages for finance research; they train our participants on fields which are not usually covered in a PhD programme. The most challenging for us is the legitimate request of our candidates to see instantaneously the link between what we teach them and what they do on a day to day basis in their job.

 

As the world advances, moving up the value chain becomes more challenging. What do you think are the important qualities a finance professional must have in order to drive finance functions successfully into the future?

A manager in any industry faces a degree of immediacy in her decision-making. The financial industry is no exception. The challenge thus is to manage the business as an ongoing one while having a clear view of where the business should go for the medium long term. Understanding the trends and the threats is crucial, and equally important is the ability to operationalise within complex organisations the co-existence of short-term and long-term acting forces.

 

With your research interest focusing on Portfolio and Asset Pricing Theory, Derivatives and Risk Management, can you tell us the most significant development you’ve witnessed thus far in the  investment/asset management industry? 

In the last decade, the widespread discredit of active management is probably the most striking development in the financial industry. The number of index providers exploded together with the development of the ETF industry. After years of warning from the academia that mutual funds for example did not deliver alphas, retail investors are now more prone to passive investing than ever before.

 

A manager in any industry faces a degree of immediacy in her decision-making. The financial industry is no exception. Understanding the trends and the threats is crucial, and equally important is the ability to operationalise within complex organisations the co-existence of short-term and long-term acting forces.”

There has been much speculation recently in the press about the impending global crash in 2020 and the inevitable fallout it will cause. What’s your view about the current state of the global economy in a few sentences?

The global economy is dominated by three big players; the U.S., China and Russia. Political risk originating from the international relations is huge and financial markets, which are forward looking by nature, are concerned with the potential impact it has on the real economy (growth, unemployment, etc). Europe could have played the role of an island of peace. Unfortunately, the Brexit and election outcome in Italy have just amplified the worldwide political uncertainty. Interest rates increase by Central Banks is a clear signal that they prepare for the worst. Given the zero lower bound we have reached for interest rates, they will be left with no other instrument than the balance sheet in case of a crash. Given the current huge total of balance sheet, Central Banks have almost no margin. All in all, markets hate uncertainty and they let politicians know it!

 

People in the upper echelons naturally have a lot on their plate. How do you make sure that you maintain a healthy lifestyle, both in your professional and personal life? What are your favourite routines?

I work rarely during weekends and in the evening when I go back home. My workday is fully dedicated to my job but when I go back home I spend all my time with my family. Same in the weekend. Fortunately, we also have generous holidays in France in general and at EDHEC in particular. I do take breaks from time to time.

 

What makes a job well done for you? When do you feel happiest and accomplished?

Ultimately when I succeeded in what motivated me in the first place to do this job: efficient transfer of knowledge to my students! I feel happy when I receive a mail, a message on LinkedIn, or by any other means from former students describing how what they learned in class has been useful for their interview, current work, etc.

 

Keep an eye on what has been published by academic scholars. They often offer a perspective that is very hard to have when overwhelmed by the routine. One needs to prepare for the next disruptive change.”

Lastly, any other messages you wish to share with our readers, particularly to those who aspire to establish a career in the financial industry?

Yes, definitely: keep an eye on what is published by academic scholars. They often offer a perspective that is very hard to have when overwhelmed by the routine. Firms are not prone to deep debates and permanent questioning of their practices. This is obviously understandable but one needs to prepare for the next disruptive change.

Thank you very much, Dr. Lioui. A pleasure speaking with you.

About the Interviewee

Abraham Lioui, PhD is a Professor of Finance and the Head of Data Science, Economics and Finance Faculty, as well as the Director of the PhD in Finance Programme at EDHEC Business School, France. He has received various teaching awards and has supervised over 100 doctoral and master students. His main research interests include Portfolio theory and dynamic asset allocation, Pricing and hedging of derivatives, Asset pricing theory, and Monetary policy and asset pricing.

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