Chicago Booth professor Raghuram Rajan, an expert in banking, corporate finance and economic development, has won the prestigious 2011 Infosys Prize in India for his research on the contribution of financial development to economic growth. He also was cited for his research on the potentially harmful effects of dysfunctional incentives that lead to excessive risk-taking.
Rajan was one of six winners of the award, which recognizes outstanding scholars in areas including economics, mathematics, engineering and computer science. Each winner receives about $100,000 and a 22-karat gold medallion, making the Infosys Prize the largest monetary award given in India for research, according to an announcement from the Infosys Science Foundation.
Rajan will formally receive the award at a ceremony in Bangalore on Jan. 9, 2012.
In addition to his work on economic growth and dysfunctional incentives, the award citation says Rajan “presented convincing evidence of the possibility of a global financial crisis – a subject on which he has been vocal at least from 2005, well before the actual crisis that occurred during 2008-09.”
His recent book, Fault Lines: How Hidden Fractures Still Threaten the World Economy, “is a masterly overview and analysis of the complex interaction between financial institutions, government and people,” the Infosys Prize jury chaired by Prof. Amartya Sen said. “Rajan has brought a remarkably broad vision to the understanding of the financial and economic crises that currently plague the world.”
Scientific research “is one of the most powerful accelerators of growth and development, especially for an emerging economy like India,” said T.V. Mohandas Pai, president of the Infosys Science Foundation Board of Trustees. “We instituted the Infosys Prize with the aim to not only recognize some of the finest researchers but also encourage a research-oriented mindset among students.”
Rajan is the Eric J. Gleacher Distinguished Service Professor of Finance at Chicago Booth, where he teaches MBA courses in international corporate finance and a PhD course in the theory of financial decisions.
Fault Lines won the Financial Times/Goldman Sachs Business Book of the Year Award in 2010. His papers have been published in the top economics and finance journals, and he has served on the editorial boards of the American Economic Review and the Journal of Finance.
In 2003, the American Finance Association awarded Rajan the inaugural Fischer Black Prize, given every two years to the financial economist under age 40 who has made the most significant contribution to the theory and practice of finance.
Rajan is currently an economic advisor to the prime minister of India, a member of the advisory board of the Comptroller General of the United States, director of the Chicago Council on Global Affairs and a director of HeyMath. He is on the advisory board of BDT Capital, Bank Itau-Unibanco in Sao Paulo, Brazil, Moodys, and is a senior advisor to Booze and Co.
He previously served as economic counselor and director of research at the International Monetary Fund.
Rajan joined the Booth faculty in 1991 after receiving his PhD from MIT. Earlier he earned an MBA from the Indian Institute of Management in Ahmedabad and an undergraduate degree from the Indian Institute of Technology in Delhi.