Professor Laurent Jacque is awarded inaugural Walter Wriston Chair of International Business Relations

On Thursday December 18th, Professor Jacque was awarded the Walter B. Wriston Chair in International Business Relations. The inaugural Wriston chair, the 9th endowed chair at The Fletcher School is the first of its kind for the expanding International Business Relations program. It represents Fletcher’s commitment to preparing global executives for the changing nature of the global marketplace through innovation, excellence and quality. Peter Ackerman, Chairman of The Fletcher School Board, accepted the endowment on behalf of the school, and Stephen W. Bosworth, Dean of the Fletcher School, presented the award to Professor Laurent Jacque. The acceptance address to over 130 Fletcher faculty, leading Citigroup bankers and distinguished Fletcher alumni, discussed the evolution of capital markets and financial innovation. 

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Professor Laurent L. Jacque [web page]

The Walter B. Wriston Chair is an endowed chair at the Fletcher School, fully supported by Walter Wriston, the former Chairman and Chief Executive Officer of  Citicorp and Citibank for 17 years. The chair will fully support a professor of international finance in Fletcher’s expanding International Business Relations program. A Fletcher alumnus, Mr. Wriston is still regarded as a legendary figure on Wall Street, having led Citicorp and Citibank from 1967 to 1984, serving on Reagan’s Economic Policy Advisory Board and on The Business Council. Recently complemented by CNN’s Lou Dobbs as “one of the pre-eminent minds of our time,” Mr. Wriston has also contributed two books to the financial community: Risk and Other Four Letter Words and The Twilight of Sovereignty.

During the inaugural lunch, Walter Wriston shared some words of wisdom on the current issues of financial integrity stressing a need for increased governance and financial integrity in the midst of recent financial malfeasance.

Professor Jacque’s inaugural lecture discussed the evolution of capital markets to gradually reduce the cost of capital and effectively allocate risk across capital markets. Professor Jacque’s research discusses four financial drivers responsible for the evolution of the world’s capital markets and allocation of risk across capital markets: increased deregulation, additional financial innovation, the securitization revolution and increased disintermediation.

Financial developments, according to Professor Jacque, have benefited from increased deregulation. The most advanced financial systems benefit from low levels of financial segmentation, in equity, interest and exchange rate markets, where low levels of segmentation are a sign of advanced financial markets. Financial innovation has enabled the movement of risk towards institutions that can effectively manage it. Innovations such as the commodity price swap have allowed high risk markets to mitigate risk through more developed capital markets. In addition, the availability of cheaper consumer financing has grown globally as the securitization revolution, traditionally successful in U.S. consumer markets, has grown to provide low financing costs to consumers in developing markets while moving risk towards developed institutions. Finally, financial intermediaries are being pushed out of capital markets as local banking oligopolies are being broken up to allow foreign banks and other financial institutions to provide new sources of capital.

Although Professor Jacque suggested that these four financial drivers have a significant impact decreasing the cost of capital, he concluded by suggesting that financial markets, particularly debt markets, are still under-developed in parts of the world. Without developed bond markets, Jacque cautioned, the cost of capital in financial markets may become distorted leading to possible misguided investment decisions. Developing debt markets may be a key criterion for continued financial innovation across these markets.

Laurent Jacque is the Walter B. Wriston Chair of International Business Relations, Professor of International Finance & Banking and Director of the International Business Relations Program at the Fletcher School. He also holds a joint secondary appointment at the HEC School of Management (France) as Professor of Economics, Finance and International Business. Professor Jacque is the author of two books, Management and Control of Foreign Exchange Risk and Management of Foreign Exchange Risk, in addition to numerous articles on currency risk, insurance and international finance. Laurent Jacque has been honored with five teaching excellence awards over his career at the Wharton, Carlson, HEC and Fletcher Schools.