Donation fuels Cambridge’s research ambitions

William Janeway, vice-chairman at Warburg Pincus, a leading New York private equity firm, has donated $10 million to the University of Cambridge’s Judge Institute business school. The money will fund research into the links between the risk management behaviour of banks and derivatives dealers and the macro-economy.

The newly created Cambridge Endowment for Research in Finance (Cerf) will build on the research by professor Michael Dempster, a frequent contributor to RiskNews' sister publication Risk www.risk.net and an expert in extreme risk management. He expects the research findings will be of particular interest to financial regulators, as well as market participants.

“The endowment has been set up to enhance our understanding of how and why financial markets have evolved and why they behave as they do,” said Janeway who received his PhD in economics from Cambridge’s Pembroke College in 1971. “Recurrent financial crises in the emerging markets, the Long-Term Capital Management fiasco and the internet bubble validate this mission and confirm its timeliness.”

The research will cross conventional disciplinary boundaries and address the theoretical analysis, operational realities and economic consequences of financial behaviour. The acting director of Cerf is Warburg Pincus adviser Lord Eatwell, president of Cambridge’s Queens College, and a director of the UK’s Financial Services Authority. Dempster will also be involved in establishing the foundations for the research, and he said a full-time director would be appointed within a year, alongside an international advisory board of senior investment bankers with experience in risk management, and a team of visiting scholars.

Janeway’s $10 million donation is the largest the Judge Institute has received since Sir Paul Judge, the former Conservative Party director general, established the business school with an £8 million gift in 1990. Dempster said the new money is a further boost to the school’s growing reputation. “The Times newspaper’s 2001 rankings places us as the third best business school in Europe, behind Insead and the London Business School. And that’s not at all bad for a school that was placed nowhere five years ago.”