In that respect, the puzzle is not that fintech is happening now. The puzzle is why it did not happen earlier.” (Philippon, 2016). Apart from Amir Sufi and Atif Mian, Thomas Philippon would probably complete my top 3 list of most influential “young” finance scholars (with young I mean being in your 40s, it is considered young I guess in the field, compared to what age some finance scholars get awarded Nobel Prizes).

A seminal piece of his academic work is his contribution on efficiency in the financial industry (Philippon, 2015). Published in the AER, that paper is the result…


In this blog I want to take a step back. Let’s discuss the state of research in finance. First and foremost research in finance is of high quality. E.g. scientific advances in finance like introducing deposit insurance to prevent bank runs and distinguishing luck versus skill in the asset management industry has benefited society at large. But nevertheless in recent years there has been discussion about the incentives and agency problems in research in finance. I’’ll draw from Harvey (2017) address of the American Finance Association. I’ll elaborate on some of these problems in this blog.

Publication bias

Consider the…


Let’s cut to the chase. I’m a big fan Darrel Duffie’s work on the mechanics of markets. It’s something that hasn’t featured prominently during my Financial Economics masters, but it’s really worthwhile to think about. Not all assets trade on highly liquid and near frictionless exchanges. In fact, most assets trade on (intermediated) OTC markets which has implications for price-discovery and efficiency. It’s not surprising that a large strand of the literature has devoted time and effort researching how the design of a market or intermediation by financial institutions influences asset pricing behaviour of particular asset classes (more on such…


In recent years financial regulators are grappling with the question on how to regulate financial innovations (or in popular terms fintech) in the industry. Be too strict and the regulator risks killing the goose with the golden eggs. In the long run it is new ideas, technologies or management practices that keeps an advanced economy steadily growing at 1-3 % real GDP growth rates. Think of Ryanair turning a plane around in 20 minutes today compared to 1 hour for an airliner in the 70’s.

But be too loose, and the regulator risks information asymmetries (resulting in adverse selection and…


It is a very popular conversation topic these days among millennials. And I personally have had countless discussions on home prices both with my Dutch and Indonesian friends: prices for property, especially in metropolitan cities, seem to behave like a rocket taking off. Alas, perhaps again one more worry for millennials.

And at first instance, these millennials might be right. Land is scarce, the population is growing and interest rates are historically low, all of which should drive up home prices. Eyeballing the data collected by the Bank for International Settlements (BIS) and Bank Indonesia (BI), it certainly looks like…

Azzam Santosa

Personal blog: mostly harmless economics

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