The title really was to attract those who were interested in financial analysis! What I am referring to is a paper by Gregory Connor, Thomas Flavin and Brian O’Kelly analysing the cause of the Irish economic downturn http://www.irisheconomy.ie/Notes/IrishEconomyNote10.pdf. Normally, I would not stray into these territories without protective headgear, but my reason for doing so this time is to point out that SFI has taken steps to strengthen Ireland’s research abilities in the area of financial mathematics, including asset and risk management.
Two years ago the need to strengthen Ireland’s research capabilities was highlighted in a report from the Department of the Taoiseach and arose in part from the realisation that the IFSC, as with all areas of the Irish economic sector, would benefit from having more highly skilled people available to address more complex problems.
At SFI we responded by establishing a Strategic Research Cluster (SRC) in financial mathematics the Financial Mathematics Computation Research Cluster (FMC2) http://www.fmc-cluster.org. This became the 19th focused cluster of investment that we had made (in addition to 10 larger entries into important sectors of the economy through our CSET programme). The successful winners of this competition (judged by international peer-reviewed as is the case for all SFI activities) included the paper authors Prof Gregory Connor (NUIM) and Dr Thomas Flavin (NUIM), together with Prof Anthony Brabazon(UCD) who leads the cluster, Prof. John Cotter (UCD), Dr David Edelman (UCD), Prof Paolo Guasoni (DCU and Boston University) and Dr Michael O’Neill (UCD).
While their work is at an early stage, this investment has proven to be timely for reasons which were not fully anticipated. The economic crisis that we face requires more analytical approaches to provide a counterbalance to opinion in hypothesis. The investment in this area has also coincided (but was not the cause of) with a series of announcements by IDA in the financial services area, including investments by CITI and Zurich Financial Services Group. The paper that was referred to above got greater visibility because it was picked up and commented upon by Paul Krugman, The New York Times http://www.nytimes.com/2010/03/08/opinion/08krugman.html). It is positive that Ireland is seen to be analysing what went wrong in the past. I think it’s also positive that SFI is investing in the future through bringing more skilled people into the financial services area.
In addition, FMC2 were recently profiled in the international journal Quantitative Finance – http://www.informaworld.com/smpp/content~db=all~content=a919806002