Mission, History, and Objectives
The objective of the Salomon Center is to focus high quality research attention in the area of financial economics. Among its activities, the Center conducts new research across a wide array of financial topics; conducts high profile conferences for academics, practitioners and regulators; and distributes material to the community highlighting important research developments in specific areas covered by the Center.
Founded in 1972 by a grant from the partners of Salomon Brothers, The Center, directed by Alexander Ljungqvist, specializes in the study of financial institutions, including commercial banks, investment banks, managed funds and insurance companies. The Center funds its activities through endowment income, contributions by corporate sponsors, and income from publications and conferences. The first Director of the Center was Professor Kalman Cohen (1972-75), who was succeeded by Professor Arnold Sametz (1975-90), and later by Professor Ingo Walter (1990-2003), and by Professor Matthew Richardson (2003-2015).
Over the years, the Center has attempted to be in the forefront of business and regulatory developments affecting the financial services industry. Research undertaken as the Center laid the groundwork for US financial deregulation, which occurred with the 1999 Gramm-Leach Bliley Act. Other work pioneered new approaches to portfolio optimization and the dynamics of new investment instruments such as exchange-traded funds. A broad range of research on derivatives and asset pricing has resulted in the Center becoming the focus of work in this field. Research on corporate governance, the role of bond rating agencies, executive compensation, professional conduct and conflicts of interest, all of which rose to prominence in the early part of this decade, was conducted well before these issues came to the attention of the public. So did work on bankruptcy prediction, credit risk, and distressed debt markets, which have influenced the thinking of regulators and investors around the world.
Recently, the Center has played an important role in the development of the new architecture of global finance. The Center was instrumental in the organization of the NYU Stern School book projects, Restoring Financial Stability: How to Repair a Failed System (Wiley 2009), Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance (Wiley 2010), and Guaranteed to Fail: Fannie Mae, Freddie Mac, and the Debacle of Mortgage Finance (Princeton Press 2011). The Center has been involved in putting together various conferences, supporting research and providing educational activities (i.e., courses and events for students related to the financial crisis of 2007-2009).
Currently, the Center also helps incubate several research initiatives, each directed by an NYU Stern professor--Credit & Debt Markets directed by Edward I. Altman (past FMA President), The NASDAQ OMX Derivatives Research Project directed by Stephen Figlewski (Founding Editor, Journal of Derivatives), Financial Institutions, directed by Alexander Ljungqvist, and Financial Regulations, directed by Matthew Richardson. Two earlier initiatives, still affiliated with the Center, are now on their own--Corporate Governance directed by David Yermack, in the NYU Pollack Center for Law and Business and The Volatility Institute directed by Robert F. Engle (2003 Nobel Laureate in Economics).