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Winning EU funding for his finance research, Sven Klingler compares himself to a geologist studying earthquakes.

Why is your research important?

Countries, banks, and other institutions need to borrow money to function. Problems in accessing external funding can threaten even the safest institutions.

In the most extreme cases, such funding frictions can lead to the default of large institutions and destabilize the entire financial system. This was an important part of the financial crisis in 2008 and at the beginning of the COVID-19 crisis in 2020.

I think of my research as analyzing something that happens deep down in the financial system. If we think of the economy as city near the ocean, then funding frictions are somewhat distant because borrowers and lenders usually interact somewhere below the sea.

When these interactions go smoothly, the economy is unaffected by funding frictions but if there is an issue in these interactions, the tremor below the sea can create a shockwave or “funding friction tsunami” that threatens the economy. 

Like a geologist studying earthquakes, my research is important because it helps us understand how likely such funding friction tsunamis are and which cities (or parts of the economy) are most in danger.

What do you want to change i business or society?

I want to improve our understanding of financial frictions and contribute to preventing crises.

Continuing the comparison above, I want to create a documentary about what happens below the water and inform a broad audience about these tensions.

Read more: Sven Klingler wins EU funding to investigate financial frictions

What is the biggest challenge in your work?

Decision-makers and other researchers have limited time and patience for reading research results. Therefore, it is crucial to focus on the most relevant topics and present the findings in a precise and coherent way. This is much easier said than done.

Why did you choose to become a researcher?

When I was a master student, I always thought I would work in the financial industry. However, when I was writing my master thesis, I enjoyed the research process of reading papers and testing hypothesis so much I wanted to continue.

I applied for a PhD position and was lucky enough to get it. After about 1-2 years of PhD studies, I recognized that being a researcher is a fantastic job: I can choose the topics I want to work on, choose who to work with, and (to some extent) set my own working hours. That is when I decided to pursue an academic career.

What would you do for a living if you couldn't do research?

If I hadn’t discovered research, I would probably have taken a job in the financial industry. In an internship, I worked on a trading floor, and it was great fun being so close to the markets and seeing how they react to events.

Sven teaches course on

Asset Management in MSc Finance

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