For What We Stand

Christian Helmenstein

In recent years financial assets and institutions have attracted ever more attention. Most prominently, the awarding of the 1997 Nobel Prize in Economics to Robert Merton and Myron Scholes for the pricing of financial options reflects the emergence of finance as a fully-fledged field of scholarly research. The Institute for Advanced Studies has responded to the need for a systematic coverage of capital-market related topics by formally establishing a new Department of Finance in October 1997.

A constituent principle of this undertaking was and continues to be the understanding that no resources of existing departments (economics, political science, sociology) should be transferred to the new department. Along with the immensely tightened public financial support for the institute in general, it was obvious from the very beginning that the new department would thus have to earn its budget on the market. This notwithstanding, like the other IHS departments the Department of Finance has also managed to offer the public good of post-graduate education in the form of its full-time Program in Quantitative Finance next to its research and consulting activities.

As agreed upon and laid down in a departmental document, the Department of Finance pursues a threefold strategic mission.

Strategic Mission It is our ambition to provide high-level post-graduate education, and to sustain opportunities which will induce faculty members to make the best out of their capabilities; experience the joy of innovating at the frontier of research and to achieve breakthroughs; contribute to the reduction of scarcity through the enhancement of efficiency.

By its very history, the Department of Finance is the institute's most entrepreneurial department in both its organization and conduct. To guide the department's development, four basic principles have been established that are to be unconditionally maintained.

Four Basic Principles Professional integrity as reflected by compliance with scientific principles Personal commitment to quality, originality, and innovation Low-replicability and high value added of our products Empowerment of department members through an open exchange of information and consultation

Various provisions are already in place to ensure the implementation of these guiding principles and the fulfillment of the department's strategic mission. Strategic research units play a core role in this effort. Being coordinated by senior department members, the strategic research units represent the nuclei of future departmental growth.

Inspired by the conviction that non-profit organizations, if managed professionally, can act as successfully as commercial companies, the Department of Finance has set out to put this claim to a test. So far, the departmental dynamics has been very encouraging. This provides a solid basis for the pursuit of an enhanced degree of collaboration and networking, a systematic in-house human resource development, and a multi-country orientation of the department's teaching, research, and consulting services.