Robin Greenwood

Last updated
Robin Greenwood
Born1977
Belgium
Institution Harvard Business School
Field Financial economics, stock market, financial bubbles
Alma mater Massachusetts Institute of Technology (B.S.)
Harvard Business School (PHd.)
AwardsJack Treynor Prize

Robin Greenwood (born 1977) is a British-American economist, and both the George Gund Professor of Finance and Banking and the Anne and James F. Rothenberg Faculty Fellow at Harvard Business School. He was formerly head of the school's finance unit, and chair of the Behavioral Finance and Financial Stability project. He also served on the Financial Advisory Roundtable of the Federal Reserve Bank of New York.

Contents

Greenwood is known for his work on behavioral and institutional finance, with a particular focus on "macro-level" market inefficiencies. Other research has included the predictability of stock market bubbles, and behavioural aspects of bond markets.

Academia

Greenwood received a B.S. in Economics and Mathematics at MIT in 1998, before receiving his Ph.D. from Harvard in Economics in 2003. [1] [2] During his Ph.D., Greenwood spent time as a post-doctoral Fellow at Harvard Business School, before becoming an Assistant Professor of Business Administration there in 2003. He has remained a member of the school’s faculty since, though was a Visiting Fellow at the London School of Economics in 2007, and a Schoen Scholar at Yale University in 2008. Greenwood became a full professor in 2012. [3] [4] He also spent time, between 2018 and 2021, as head of the Finance Unit at Harvard Business School, and was formerly chair of the Business Economics PhD program. [1]

Greenwood was a member of the Financial Advisory Roundtable of the Federal Reserve Bank of New York alongside Viral Acharya, Thomas Philippon, John H. Cochrane, Jeremy C. Stein and others, and served as an Editor of the Review of Financial Studies. [5] [6] [7] [8]

Research

Expectations and bubbles

Greenwood’s research focuses primarily on behavioural and institutional finance, with a specific view on macro-level market inefficiencies; notably monetary policy, stock price bubbles, supply and demand in the bond markets, and predictable financial crises. [9] [10] [11] [12] [13] [14] His work on “Bubbles for Fama”, which defined a crash as a 40% drop within a two-year period and set parameters for the probability of crashes, has been frequently referenced in suggesting that the valuation of Tesla and Bitcoin are bubbles. [15] [16] [17] [18]

Other work includes the role of institutional finance and the 'financialisation' of the economy, as well as private sector impacts on the economy, where a series of articles increased interest in investor expectations. [lower-alpha 1] [19] [20] [21] For his work on an extrapolative capital asset pricing model, the Institute for Quantitative Research in Finance awarded him the Jack Treynor Prize in 2014. [22]

Behavioral finance & financial stability

Greenwood also spent time as the faculty director of the Behavioural Finance and Financial Stability project at Harvard Business School.The project, launched in July 2016, focused on analysing and exploring stability within financial systems. Within it, Greenwood led research on liquidity management within banks, and the nature of modern bank runs. His work also linked growth within the financial sector to being a prelude to crisis; [23] the perspective noted that ‘that financial instability often follows periods when financial institutions, like investors and policy makers, have underestimated risks’. [24] Greenwood's later work in 'Predictable Financial Crises' concluded 'the combination of rapid credit growth and asset-price gains during the prior three years is associated with a 40 percent probability of entering a financial crisis within the next three years'. [25]

Retail investors

Greenwood's research has also focused on individual investors, as well as the rise of 'meme stocks' and impact of retail investors in buoying the American market in 2020–21 and research on the impact of COVID-19 on the economy. [26] [27] His research noted that market speculation can flare with the combination of stimulus funds and retail investors. [28] [29] [30] Earlier work, alongside Nicholas Barberis and Andrei Shleifer linked bullishness to frequent extrapolation of results from recent returns, as well as observing the difficulty for individual investors in finding market-beating strategies. [31] [32] [33] [34]

See also

Notes

  1. ↑ Greenwood wrote an article on the impact of private sector reliance on short-term debt.

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References

  1. 1 2 "State Street Announces Partnerships with MIT's Antionette Schoar, Harvard's Robin Greenwood to Advance Cryptocurrency and Macroeconomic Research Initiatives". www.businesswire.com. 2021-11-17. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  2. ↑ Writer, Christina Pazzanese Harvard Staff (2020-04-27). "Shutdown threatens businesses, but reopening has its own challenges". Harvard Gazette. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  3. ↑ Materials, United States Congress House Committee on Transportation and Infrastructure Subcommittee on Railroads, Pipelines, and Hazardous (2008). Investment in the Rail Industry: Hearing Before the Subcommittee on Railroads, Pipelines, and Hazardous Materials of the Committee on Transportation and Infrastructure, House of Representatives, One Hundred Tenth Congress, Second Session, March 5, 2008. U.S. Government Printing Office. p. 37. ISBN   978-0-16-083585-8. Archived from the original on March 8, 2023. Retrieved January 30, 2023. And our final panelist is Mr. Robin Greenwood , Assistant Professor at the Harvard Business School .
  4. ↑ Kinlaw, William; Kritzman, Mark P.; Turkington, David (2021-07-27). Asset Allocation: From Theory to Practice and Beyond. John Wiley & Sons. ISBN   978-1-119-81771-0. Archived from the original on 2023-03-08. Retrieved 2023-01-30.
  5. ↑ "State Street Announces Partnerships with MIT's Antionette Schoar, Harvard's Robin Greenwood to Advance Cryptocurrency and Macroeconomic Research Initiatives". www.businesswire.com. 2021-11-17. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  6. ↑ "Financial Advisory Roundtable – FEDERAL RESERVE BANK of NEW YORK". www.newyorkfed.org. Archived from the original on 2022-12-09. Retrieved 2023-01-04.
  7. ↑ "Robin Greenwood in Reuters – The Review of Financial Studies". Archived from the original on 2023-01-04. Retrieved 2023-01-04. RFS Editor Robin Greenwood's paper is featured in Reuters in a piece titled, "Fed should keep trillions in bonds to provide stability: paper."
  8. ↑ "Fed should keep trillions in bonds to provide stability: paper". Reuters. 2016-08-27. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  9. ↑ Writer, Christina Pazzanese Harvard Staff (2018-02-06). "Harvard Business School's Robin Greenwood discusses the stock market plunge". Harvard Gazette. Archived from the original on 2023-01-04. Retrieved 2023-01-04. The things I've worked on have been investor expectations, measurement of bubbles, and things like that. We did some work on trying to predict the end of bubbles.
  10. ↑ "Energy stocks are in a bubble — and here's when they're likely to crash". MSN. Archived from the original on 2023-01-04. Retrieved 2023-01-04. The researchers found that the probability of a market sector crashing — defined as a drop of at least 40% over the subsequent two years — was correlated with its trailing two-year performance relative to the overall market.
  11. ↑ "Vital Signs: swaps, options and other derivatives aren't just for the financial elite". UNSW Newsroom. 2021-04-06. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  12. ↑ Roche, Julia La. "Harvard Business School Reviewed One Of Kyle Bass' Most Bearish Trades". Business Insider. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  13. ↑ Sussman, Anna Louie (2021-07-07). "Market Bubbles Aren't Entirely Irrational Exuberance". UCLA Anderson Review. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  14. ↑ Roncal, Jose D.; Abbo, Jose N. (15 Nov 2008). The Big Gamble: Are You Investing Or Speculating?. Wheatmark, Inc. ISBN   978-1-60494-199-9. Archived from the original on 8 March 2023. Retrieved 30 January 2023.
  15. ↑ Hulbert, Mark. "Bitcoin's role in retirement portfolios". MarketWatch. Archived from the original on 2023-01-04. Retrieved 2023-01-04. In making this prediction I am following the lead of an academic study entitled "Bubbles for Fama," which appeared several years ago in the Journal of Financial Economics. Its authors were Robin Greenwood, a finance and banking professor at Harvard Business School and chair of its Behavioral Finance and Financial Stability project
  16. ↑ Hulbert, Mark. "How we know that Tesla is a bubble that is going to pop". MarketWatch. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  17. ↑ Hulbert, Mark. "You shouldn't believe all this talk about a stock-market bubble about to burst — here's why". MarketWatch. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  18. ↑ "Bubbles for Fama". YouTube . Archived from the original on 2023-01-04. Retrieved 2023-01-05.
  19. ↑ Bartlett, Bruce (2013-06-11). "'Financialization' as a Cause of Economic Malaise". Economix Blog. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  20. ↑ "Can The Government Discourage Short-term Borrowing By The Private Sector?". Forbes India. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  21. ↑ "Was Unconventional Monetary Policy a Success?". The University of Chicago Booth School of Business. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  22. ↑ "Q Group – Jack Treynor Prize". www.q-group.org. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  23. ↑ "About – Behavioral Finance & Financial Stability – Harvard Business School". www.hbs.edu. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  24. ↑ "Financial Meltdowns Are More Predictable Than We Thought". HBS Working Knowledge. 2020-09-24. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  25. ↑ Shaw, Jonathan (2020-12-07). "Can Financial Crises Be Predicted?". Harvard Magazine. Archived from the original on 2023-01-04. Retrieved 2023-01-04. "That's an enormous number," notes Gund professor of finance and banking Robin Greenwood. And that risk compares to just a 7 percent probability in normal times. The association just "jumps out at you. You don't have to do any fancy analysis to uncover it," adds Greenwood, who is coauthor of the Harvard Business School (HBS) working paper, "Predictable Financial Crises,"
  26. ↑ "Sizing up corporate restructuring in the COVID crisis". Brookings. 24 September 2020. Archived from the original on 4 January 2023. Retrieved 5 January 2023.
  27. ↑ "Pandemic fallout is about to overwhelm the bankruptcy system and hit small businesses hardest". Fortune. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  28. ↑ "Did Pandemic Stimulus Funds Spur the Rise of 'Meme Stocks'?". HBS Working Knowledge. 2022-07-21. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  29. ↑ "Stimulus cheques have buoyed America's stockmarket". The Economist. ISSN   0013-0613. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  30. ↑ Hernandez Barcena, Lorena; Milstein, Eric; Wessel, David (17 March 2022). "Hutchins Roundup: Tuition increases, stimulus checks, and more". Hutchins Roundup. Archived from the original on 4 January 2023. Retrieved 5 January 2023. The federal Economic Impact Payments distributed during the pandemic were followed by increases in retail trading and the share prices of retail-dominated portfolios, find Robin Greenwood of Harvard Business School and Toomas Laarits and Jeffrey Wurgler of NYU Stern.
  31. ↑ Plender, John (2015-07-28). Capitalism: Money, Morals and Markets. Biteback Publishing. ISBN   978-1-84954-957-8. Archived from the original on 2023-03-08. Retrieved 2023-01-30. Yet there is now academic evidence from Robin Greenwood and Andrei Shleifer at Harvard University that when markets are close to their peak, investors are most bullish because they tend to extrapolate recent rises in prices into the ...
  32. ↑ "Are Investors Chronically Pessimistic?". The University of Chicago Booth School of Business. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  33. ↑ Shiller, Robert J. (2018-10-12). "Why Our Beliefs Don't Predict Much About the Economy". The New York Times. ISSN   0362-4331. Archived from the original on 2023-01-04. Retrieved 2023-01-04.
  34. ↑ Hulbert, Mark. "This can't-miss stock trading strategy has disappeared – and isn't coming back". MarketWatch. Archived from the original on 2023-01-04. Retrieved 2023-01-04. The takeaway, Greenwood told me, is that market-beating strategies don't last forever. Because the index effect used to be large and predictable, it was inevitable that Wall Street would eventually discover it and, in the process, kill the goose laying the golden egg. He and his-co-author write: "The decline of the index effect is much like the evidence for other anomalies [patterns that can be profitably exploited], that they decline once they are well recognized by the market."
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