You are here:

Research expertise

The Department of Banking and Finance has a strong commitment to producing high-quality research which has influence in the academic community, as well as relevance to industry.

We have a lively research culture with regular research seminars and workshops.

Our expert academic staff currently supervise PhD students across a range of banking and finance topics.

Research infrastructure

We support our researchers by providing a range of state-of-the-art facilities and resources:

The STARLab is a controllable environment in which trader responses to events and scenarios can be recorded, time stamped and analysed. STARLab outputs have been the basis of published research on the behaviour of traders and the performance of financial strategies and policy initiatives
To fully support our researchers and research students, we are subscribed to a full range of research databases including:
- 13F Database
- Morningstar - Aspect Huntley Database (DataLink)
- Bankscope
- Bloomberg Professional Service
- Centre for Research in Security Prices (CRSP)
- Compustat
- Connect 4
- DatAnalysis
- Premium
- DataStream
- Monash FInancial Database (MonFIDs)
- IRESS Market Technology
- LoanConnector
- Mergent
- FISD
- SDC Platinum
- SIRCA
- Share Price and Price Relatives (SPPR)
- (AGSM)
- I/B/E/S Thomson Financial – Institutional Brokers' Estimate System
- OSIRIS
- ORBIS
- ZEPHYR
- WRDS Platform Accessible Databases.

Research focus

The Department of Banking and Finance has research focused in the following areas:

Asset pricing research in the department primarily focuses on the empirical asset pricing of stocks. This includes research on stock market anomalies, multifactor asset pricing models such as the Fama-French three and five factor models, investment-based asset pricing, behavioural and risk-based explanations for observed patterns in stock prices and similar topics. Viet Cao, Neal Galpin, Philip Gray, Philip Gharghori, Bharat Parajuli and a number of other staff research in this space.
Another line of research examines informed options trading and its interaction with stock prices; John Chu, Li Ge and Philip Gharghori are active in this area. Market microstructure research focuses on security market design, quality, and regulations. Philip Drummond, Huu Duong and Paul Lajbcygier are working in this area. The department is also active in managed funds, debt markets and derivatives research. A notable example of this is John Chu’s paper on mutual fund holdings of credit default swaps.
The department has many staff members who specialise in corporate finance research. For example, one major corporate finance research area is capital structure. On the equity financing side, a recent study published in the Journal of Financial Economics by Huu Duong and his co-authors examines the relation between democracy and IPO underpricing. Consistent with the notion that democracy is a reflection of shareholder protection, they show the level of underpricing is lower in countries with greater levels of democracy. On the debt financing side, a paper by Thanh Huynh and Ying Xia links bond prices to climate change news risk. This paper shows that bonds with a higher climate change news beta earn lower future returns, and is published in the Journal of Financial and Quantitative Analysis. In addition, Jin Yu and his co-authors show that the Credit Default Swap trading can increase corporate default rates, eventually resulting in a lower firm value. This paper is published in Management Science.
The department has also seen several top publications on corporate governance. Ying Dou and his co-authors examine the practice of company executives pledging their shares as collateral to secure personal bank loans, and show that this practice has a significantly negative impact on firm value as it induces a higher level of stock crash risk as well as a higher level of managerial risk-aversion. This paper is published in the Review of Financial Studies. Emdad Islam and his co-author focus on firms led by inventor CEOs. Their study, which is published in the Journal of Financial Economics, shows that these firms are associated with higher quality innovation. Emma Zhang and her co-author focus on situations where independent directors suddenly become busier, such as when they have serious illness or when they have other commitments that are more attention-demanding. They document declining firm value and operating performance for firms with a large proportion of such directors, which reflects that independent directors are valuable. This paper is published in the Journal of Financial Economics.
Some of our staff members are active in this area. Chris Veld and Yulia Merkoulova published several papers where they use household panels from Tilburg University (in The Netherlands) and the University of South California to study the behaviour of individual investors. They pay particular attention to the stock market participation puzzle. This puzzle shows that too few individuals invest in the stock market. Chris and Yulia find several factors that help explain this puzzle, such as return ignorance (many individuals don't have realistic expectations about return and risk), the personal equity risk premium, and investor inertia (some investors are simply not interested in investing in stocks). Their work also highlights the importance of financial literacy for making optimal financial decisions.
Yushui Shi studies how households' personal experiences play a long-lasting role in shaping their risk-taking behaviours. One of his papers looks at the Japanese household survey data and demonstrates the two-way effect that natural disaster experience can have on individual behaviour. The paper finds that Japanese households feel less (more) risk after they have lucky (traumatised) experiences of earthquakes that have less (more) fatalities than expected. Yushui also does research on what mistakes retail investors make when deciding on stock investments and on how such behavioural biases affect asset prices in equilibrium.
The department houses many members who research banking-related issues from a variety of angles intersecting with corporate finance, macroeconomics, accounting, and advances in technology.
Financial intermediation and the environment. Emdad Islam. Viet Do and Hannah Nguyen collaborate with other researchers in Australia and Europe to study the connection between banking finance and environmental issues, ranging from landing locally in the US and understanding the impact of droughts. Hannah Nguyen, Vied Do, and Thanh Huynh have recent articles showing that the cost of equity and bank loans are significantly higher for firms affected by drought.
Regulation and stress tests. Important issues in the regulation of banking are being explored by Christine Brown, Hassan Naqvi, Barry Williams, and Ying Liang with a variety of co-authors in an Australian and international context.
Banking Systems and Technology. Kym Brown and Michael Skully, in cooperation with other researchers in South Asia and the Uk, have extensively studied Islamic finance and banking and have developed expertise in understanding financial systems from a cross-country perspective.
A more recent line of research by Kym Brown and John Vaz has explored the role of cryptotokens and Fintech in financial intermediation.
Syndicated loan market and regulation. Viet Do and Tram Vu study the syndicated loans market and its connection to firm-level investment, as well as regulation, with a focus on the US and Australia.
Australia-focused research. Barry Williams is an expert on the Australian banking sector that he has studied in connection with multinational banks and the relevance of non-interest income in teams with Jean Pierre Fenech and multiple PhD students. Barry Williams has shown that over the last decades, major Australian banks have morphed from their traditional role of deposit and loan firms into big "one-stop shop" financial institutions with risk spread across different assets.
Silvio Contessi is working on a number of papers based on his unique digitisation of the universe of Australian bank-level data between 1885 and 2022, financed by an Australian Research Council Discovery Project grant. His team is trying to disentangle the relationship between banking and macroeconomic dynamics in the very long run and building on the booming literature on the aggregate effect of bank heterogeneity on aggregate outcomes.
Several Department of Banking and Finance members study finance in historical settings. Their research uses historical data sources and performs state-of-the-art finance research. The studies aim to contribute to a better understanding of the history of financial markets and financial decision-making, but also to present historical perspectives on current issues.
Lyndon Moore has investigated the pricing of options at the Johannesburg Stock Exchange in the early 20^th century. He has also studied corporate finance topics like dividend policy in England around the turn of the 19^th/20^th century and British bank mergers in the same period. An interesting finding is that while bank mergers helped to make the system more resistant to crises they worsened the loan market for borrowers – borrowers had to pay higher interest rates and provide more collateral.
With Neal Galpin, Lyndon has also studied British IPOs in the late 19^th and early 20^th centuries. They conclude that the London market was welcoming for new and innovative ventures, in contrast to earlier studies. The London Stock Exchange played an important role in screening poor quality firms from the main market. Rejected applicants were less likely to pay dividends, survived for a shorter time, and were more likely to be forced into liquidation than their accepted counterparts. They are currently working on the asset pricing implications of changes to the allowable list of investments by British trustees.
Abe de Jong has studied the Dutch East India Company (VOC), which in the early 17^th century is often argued to be the first large corporation. He finds that developing the corporate structure with limited liability and professional directors took twenty years of struggle and failed restructurings before a solid corporate model arose. Abe also studies mortgage-backed securities in the 18^th century, which Amsterdam bankers used to fund South American plantations that used enslaved people. The boom and bust of the mortgage-backed securities market provides an interesting out-of-sample analysis of mechanisms that led to the 2007 Financial Crisis. Finally, Abe’s work investigates the governance and financing structures of large Dutch and Belgian companies in the 19^th and 20^th century, including IPOs, convertible bond issues, interlocking directorates and anti-takeover provisions.

Monash Business School

Monash Business School

Research expertise

Research infrastructure

Research focus