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Dr Matt Elliott

Matt Elliott

Title of research: Endogenous Financial Networks: Efficient Modularity and Why Shareholders Prevent It (joint with Jonathon Hazell, MIT)

We study the implications for systemic risk of the classic conflict of interest between debt-holders and equity-holders. Through trades banks can diversify idiosyncratic risks and avoid failures following small shocks. However, the resulting financial interdependencies can create systemic risk and the possibility of multiple failures following large shocks. A social planner would resolve this trade-off by creating modular financial networks. However, we assume equity-holders control banks and show their exist trades away from the efficient networks that increase equity value. Finally, we ask which trades are profitable more generally, and whether these systematically exacerbate or ameliorate systemic risk?

Project Update - August 2018

Project Update - April 2018

Project Update - August 2017

Project Update - April 2017

Project Update - July 2016

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CERF Scholarship competition 2021 - Now Open

Nov 18, 2020

For the seventh year, Cambridge Endowment for Research in Finance is offering a scholarship scheme. Applications are invited for doctoral funding starting in October 2021. Funding is for up to 3 years and includes university and college fees and an allowance for accommodation and living expenses.

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