Better Understanding the Financial Market: Meet New Faculty Member Adelphe Ekponon
Adelphe Ekponon was hired over the summer as an assistant professor in finance at the Telfer School of Management. He completed his PhD at HEC Montréal, and prior to joining Telfer, Adelphe was an Assistant Professor in Finance at the University of Liverpool Management School. We interviewed him to learn more about his research interests.
Why did you choose to study finance? Any personal motivation behind your research interests in this area?
After graduating from an Engineering School in France, I decided to get an advanced diploma in finance to help me better manage my projects. Afterwards, I got a position in the most prestigious Engineering firm in Ivory Coast. While working there, I discovered that many people have no idea what the financial market is. So, I decided to write my MSc dissertation on optimized portfolios using stocks listed in the local market, to show how easy it is to invest in the financial market.
How did your PhD training inform your current research program?
My Ph.D. training was primarily about acquiring advanced knowledge in economics and econometrics, while reinforcing my understanding of finance and statistics. My quantitative background was very helpful in the process. I then trained in financial asset pricing, wrote my thesis, and now do research on the impacts of (macro)economic conditions on financial asset prices.
Do you have any new research highlights to share? Or alternatively any interesting publications in the pipeline, or new projects that you are excited about?
My co-authors and I recently published an article in the Journal of Financial Economics. In this piece, we show how global economic conditions can help to explain a country's bond premium. This premium is an important element of a country's net revenue, since a higher premium translates into higher borrowing costs and interest payments, which can reduce government revenue. This will lead to fewer resources for healthcare, education, and infrastructure, among others. Hence, a country’s financial risk management should include monitoring mostly global vs local risks.
How can your research influence/impact business communities in Canada?
My research aims to show that it is possible to better understand asset prices when the risk of sudden changes in economic conditions is factored into models and empirical tests. For example, the Bank of Canada uses macroeconomic variables - the Gross Domestic Product, inflation, and unemployment rate – and asset prices to decide when to raise/lower interest rates and monetary policy. If economists fail to consider key risks, we end up having overvalued asset prices – resulting in bubbles. In these cases, the only possible corrections are recessionary periods. This means unstable economic environments for businesses, generalized deterioration of job quality over time, and more.