Speech  Embargo 19 September 2019, 5.30 pm  Fourth Karl Brunner Distinguished Lecture Introduction of Raghuram Rajan, ETH Zurich  Thomas J. Jordan Chairman of the Governing Board Swiss National Bank Zurich, 19 September 2019 © Swiss National Bank, Zurich, 2019  Page 1/4  Ladies and gentlemen I am very pleased to welcome you all to this year’s Karl Brunner Distinguished Lecture. This occasion marks the 30th anniversary of Karl Brunner’s death. In the Karl Brunner Lecture Series, the Swiss National Bank pays tribute to academics whose research is of particular relevance for central banking. Today we are celebrating the outstanding contribution made by Raghuram Rajan, the Katherine Dusak Miller Distinguished Service Professor of Finance at the Booth School of Business at the University of Chicago. We are honoured that Dr Rajan has accepted our invitation to deliver this lecture. Raghuram Rajan was born on 3 February 1963 in Bhopal, India. He started his career with a bachelor’s degree in electrical engineering from the Indian Institute of Technology Delhi. Following the decision to leave the sphere of electromagnetic fields and waves in favour of the oscillations of the economy and financial markets, Raghu joined the doctoral programme at the Massachusetts Institute of Technology (MIT), where he received a PhD for his thesis ʻEssays on Banking’. Four years later, at the age of just 32, he became a full professor of finance at the University of Chicago. Exceptional academic Raghu is an exceptional academic.
He has done pioneering empirical and theoretical work across a remarkably broad field of topics. His main interests, however, lie in banking, corporate finance and economic development, and especially the role played by finance in economic development. In his paper entitled ʻFinancial dependence and growth’, co-authored with Luigi Zingales, he found evidence of a positive causality between the level of development of a country’s financial sector and income growth. According to Google Scholar, this paper has been cited more than 9,000 times. This is on a par with Milton Friedman’s influential 1967 presidential address to the American Economic Association on the concept of the natural rate of unemployment. Raghu’s trademark is his willingness to challenge the accepted wisdom of the day. The bestknown example of this took place at the Jackson Hole symposium in 2005. There he warned of an upcoming meltdown in the global financial system, with substantial negative consequences for the real economy. Three years later, the global financial crisis broke out. And it was largely caused by the very factors that he had identified. For Raghu, financial markets play an important role for economic growth in the long term. However, financial markets have a tendency to deviate from fundamental values. Financial regulation has therefore been a concern of his since well before the crisis. What are his recommendations in this regard? To be effective, regulation must avoid being procyclical, that is, over-regulating in a bust and de-regulating in a boom. Rather, regulation must be comprehensive and contingent. Consider two types of such regulation.