The Second International Moscow Finance Conference

Professor Sudipto Bhattacharya

(1951-2012)

The death of Professor Sudipto Bhattacharya was met with considerable shock and sadness in the economics profession, and in particular at the Finance Department of the London School of Economics where he had been working for more than 15 years. 

Raised in an academic family in India, Sudipto began his education with a BSc in Physics from the University of Delhi, followed by postgraduate studies in business administration at the Indian Institute of Management, Ahmedabad. He then travelled to the USA, where he obtained a PhD in economics and finance at MIT under the supervision of Prof Stewart Myers. Sudipto was recognized as one of the outstanding young economists of his time, holding assistant professorships at the University of Chicago and Stanford University, during which he won prestigious Batterymarch and Bell Labs Research Fellowships. These appointments were followed by tenured positions at the University of California, Berkeley and the University of Michigan. In 1989 Sudipto returned to his roots as Professor of Economics at the University of Delhi, where he remained for 5 years, before joining the LSE faculty in 1995.

In the early part of his career Sudipto’s work was concerned with the role of information in financial markets, writing seminal papers on signaling and delegated portfolio management. At the same time he showed the breadth of his skills and insights in a number of papers on theoretical asset pricing. His later work, post 1987, had two main themes, one a deeper understanding of banking and financial intermediation and a second, concerning innovation, research and development. In the latter, his work on the sharing of knowledge is generally regarded as seminal. Most recently, Sudipto was working on a number of projects relating to financial crises and contagion in financial markets aimed at improving our understanding of the risks facing the financial system and how to manage them.

In April 2008, Sudipto visited ICEF and HSE where he taught a Master’s course in Financial Intermediation and gave a public lecture under the title “Banking theories and the current financial crisis”[1]. One of the main ideas that he developed in this lecture is that banks in the 21^st century are much more intertwined with financial markets (as opposed to a more self-contained banking sector of the 20^th century), which represents a challenge for economic theory: It needs to combine models of banking based on contract theory and game theory with models of financial markets.

Five economists take part in the session “In memoriam Sudipto Bhattacharya”. Georgy Chabakauri has worked with Sudipto and Kjell Nyborg on securitized lending, asymmetric information, and financial crisis. Sergei Guriev worked with him on intellectual property rights and innovation. Christian Julliard was one of Sudipto’s closest colleagues and friends at the Finance Department of LSE. Giovanna Nicodano has published “Insider trading, investment and liquidity: a welfare analysis” with him in 2001. Dimitrios Tsomocos has worked with Sudipto, Charles Goodhart and other co-authors on banks and financial instability and also presents one of the papers at the Macro-Finance session of this conference.

(Parts of this text are adapted from the obituary for Prof Sudipto Bhattacharya on the website of the website of the Finance Department of the London School of Economics.)

[1] This lecture with an introduction by Maxim Nikitin can be watched at http://video.edu.ru/video/33 .