Research Impact

Department of Finance

The Department excelled in the 2014 Research Excellence Framework with almost half of our research awarded the highest category of 4 stars. The impact of our faculty research has helped to confirm the LSE as a world-leading research university.

The Bank of England and Federal Reserve used LSE research to push down market interest rates to engineer a recovery after the financial crisis

Department of Finance Research Impact Case Studies

Quotas are the wrong way to increase female representation on boards


Professor Daniel Ferreira
Professor of Finance
Department of Finance

LSE research influenced debate on lack of women in company boardrooms and the UK Government decision to reject quotas

Summary of the impact
Given that more than half of the British population is female it has been a longstanding cause for concern that so few women are appointed to company boardrooms as executive or non-executives directors.

Figures show that only a fifth of directors are women while just 7% are executives. Critics charge that not only is this an unequal and unfair representation of the workforce, but also that it translates into the exclusion of a significant pool of skilled contributors. This exclusion is considered particularly egregious given that it is occurring at the senior levels where strategic (as opposed to operational) decisions are made.

A number of approaches for increasing the diversity of those serving as executive and non-executive directors have been proposed over the last decade, including: voluntary initiatives by companies; “comply or explain” – corporate governance codes that set a target and insist companies provide an explanation should they miss it; and legal requirements setting specific quotas in terms of percentage of board membership held by women.

View the full impact case study here and a list of relevant resources here.

Helping central banks drive down interest rates


Professor Dimitri Vayanos
Professor of Finance
Department of Finance

The Bank of England and Federal Reserve used LSE research to push down market interest rates to engineer a recovery after the financial crisis

Summary of the impact
During the recent global financial crisis, the Bank of England, the US Federal Reserve and other major central banks around the world were unable to stimulate their economies by using their traditional tool – lowering official interest rates – as these had already been cut to almost 0%.

For this reason governments were looking for new ways to intervene in financial markets to reduce market interest rates. One option was known as quantitative easing (QE) – where a central bank purchases government securities or other securities from the market as a means of lowering interest rates.

View the full impact case study here and a list of relevant resources here.

 Helping regulators prevent the next financial crash


Dr Jean-Pierre Zigrand
Associate Professor of Finance
Department of Finance

Groundbreaking research by LSE economists has influenced the design of new regulations aimed at preventing a repeat of the recent global financial crisis

Summary of the impact
A small event can cause a major financial shock that spills over into the wider economy.

The recent financial crisis began with problems in an obscure part of the US housing market in 2007 but within three years had led to bank failures across the world, a global recession, a surge in unemployment and the near-collapse of the eurozone.

A team of researchers at the LSE has identified how major financial shocks are often caused by small problems within the system itself rather than an outside trigger. This idea that the cause of a crisis can grow almost unnoticed is what the researchers termed “endogenous risk”, which comes from the ancient Greek words for “growing” and “within”.

An example is the way that complex networks can accelerate and amplify the reverberation of shocks through the financial system, as in the case of high frequency trading in which price changes are transmitted to hundreds of markets within milliseconds.

Policymakers have been working hard at a national, regional and global level to prevent future crises. However the researchers found that regulations drawn up for this specific purpose can, perversely, become a channel for amplifying the problems and have precisely the opposite of the intended effect.

View the full impact case study here and a list of relevant resources here.

Research Excellence Framework 2014

LSE has confirmed its position as a world-leading research university, with an outstanding performance in the 2014 Research Excellence Framework (REF). LSE is:

  • ranked as the top university in the UK for research quality both when using an average score or using the percentage of output receiving the top 4* grade
  • the top university for impact in its social science disciplines, whether judged on GPA or the proportion of research impact awarded 4*

Further information on the REF2014 results is available from the LSE Research and Expertise pages.

The outstanding contribution of the Department of Finance to the field is reflected in the results, according to which 48 per cent of the Department’s research output was graded 4 star (the highest category), indicating that it is 'world-leading'. A further 38 per cent was identified as 'internationally excellent' (3 star). Read more in the LSE REF2014 pages.

The release of the REF also coincides with the launch of a new LSE Research Impact website which highlights the many ways the School’s research has positively influenced public life – including in business, government, the media and civil society. Similarly, the Department of Economics is showcasing below case studies of departmental research that has influenced public life.

LSE Research Impact

For the purposes of the REF2014, impact is defined as an effect on, change or benefit to the economy, society, culture, public policy or services, health, the environment or quality of life, beyond academia. Impact includes, but is not limited to, an effect on, change or benefit to:

  • the activity, attitude, awareness, behaviour, capacity, opportunity, performance, policy, practice, process or understanding
  • of an audience, beneficiary, community, constituency, organisation or individuals
  • in any geographic location whether locally, regionally, nationally or internationally. 

Impact also includes the reduction or prevention of harm, risk, cost or other negative effects.

The impact must have occurred specifically within the period 1 January 2008 to 31 July 2013, having been at any stage of development or maturity during this period.


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