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Fluctuating Markets Add Suspense to Teaching Finance

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November 18, 2008 – Reena Aggarwal had planned to focus on teaching and research as usual for the fall 2008 semester. That is, until economic chaos hit markets around the globe.

“We have just seen investment banking, as it previously existed, cease to exist,” says the international finance expert. “A major part of my research in the past has been about how companies raise capital, the role of investment banks and the issue of corporate governance. Obviously, we are facing huge corporate governance issues, which will impact my research and my teaching in a very big way this semester.”

For Aggarwal, a Stallkamp Faculty Fellow and professor of finance, the current U.S. financial crisis means that she is spending even more time researching the market. A growing fear of a global recession has the financial scholar keeping up with the market in an all-consuming way.

“The financial market is literally changing by the minute,” Aggarwal says. “There is a lot of fluff in the mainstream media right now about the status of the U.S. and international economies, but you really have to go much deeper to understand what exactly is going on.”

Since the Wall Street crisis erupted in September – when the federal government decided to take over mortgage giants Fannie Mae and Freddie Mac – Aggarwal has helped the Georgetown community better understand the complex causes and consequences of the economic downturn. She has addressed several alumni forums and student town hall meetings to explain the recent turbulence in the economy.

Educating Amid the Turbulence

The roller coaster markets of late keeps the professor on her toes, and she predicts upcoming MBA classes will bring many surprises.

“The weekly course topics I am teaching are changing – not by the day, but literally, by the hour,” says Aggarwal, who has taught at the university for more than 20 years. “I have told the students to expect changes as we go along because the whole financial industry is going to look completely different now than how it has looked in the past.”

She is bringing in speakers from the world’s leading investment banks and advisory firms to talk with students.

“It would have been great to hear from them regardless of the financial situation, but now it will be very interesting to hear from them about what is happening in their fields and what the future holds for this industry,” she says.

The crisis hits home as she prepares her students to enter the workforce. MBA student Francis Vincent (G’09) says he had considered going into investment banking, but now is seeking alternatives after a summer internship with Lehman Brothers, which went bankrupt in September. A Japanese firm later acquired Lehman.

“Since many of the investment banks went bankrupt in September, I have been talking a lot more with professor Aggarwal to understand the situation and also learn about different career options,” Vincent says. “I really trust and appreciate her knowledge and advice.”

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