Graduate donates $10m for financial research

A leading international research programme in finance will be launched today at the University of Cambridge, following a donation of $10 million from William H Janeway, Vice Chairman of the global private equity firm Warburg Pincus and his wife, Weslie Janeway, President of the Pyewacket Foundation.

The donation will establish a fund, the Cambridge Endowment for Research in Finance (CERF), based at the University's business school, the Judge Institute of Management.

The research programme will focus on financial markets and institutions which have re-emerged as prime determinants of micro-economic behaviour and macro-economic performance. The research programme funded by CERF will cross conventional disciplinary boundaries and address the theoretical analysis, operational realities and economic consequences of financial behaviour.

Announcing his donation, Cambridge University graduate, William Janeway said:

"CERF has been set up to enhance our understanding of how and why financial markets have evolved as they have and behave as they do. Events of recent years such as the recurrent financial crises in the emerging markets, the Long Term Capital Management fiasco and the Internet Bubble validate this mission and confirm its timeliness."

"CERF belongs at Cambridge," Janeway added. "As Keynes placed the key elements of finance - the determinants of investment, the relative valuation of financial and real assets, and the role of liquidity - at the core of economic analysis, so multi-dimensional research into the history, practice and theory of finance is distinctively appropriate for a 'Cambridge Endowment'."

CERF will build on the extensive research already established at the Judge Institute of Management and throughout the University. The Centre for Financial Research led by Professor Michael Dempster conducts research into financial engineering, risk management, asset liability management, real time trading and real options. There are other strong foundations in the work of the International Financial Regulation Project led by Lord Eatwell, parts of the Centre for Business Research led by Professor Alan Hughes and the work of individual researchers in the Economics, Law and Mathematics faculties. A new dimension will also be added by collaboration with finance specialists at MIT through the Cambridge-MIT Institute.

The first step for CERF will be the establishment of a research programme which seeks to link macro-economic policy, on interest rates, exchange rates and taxation, to the behaviour of individual firms - the risks they attempt to manage and the risks their actions create for the economy as a whole. This research will be conducted by local researchers and by CERF's Visitor Programme that will draw on experts from academia and the financial world for periods of up to a year in length.

The managers of the fund, will be chaired by the Vice Chancellor of the University, Sir Alec Broers and will include Professor Sandra Dawson, Director of the Judge Institute of Management. They will be supported by an International Advisory committee chaired by a practitioner from the financial sector. The Acting Director of CERF will be Lord Eatwell, President of Queens College, Cambridge pending a permanent appointment made later in the year.