Douglas Gale (left) and Franklin Allen: 'An opportunity to do something really important'
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They have been co-authors for nearly 30 years, but it has taken almost as long for Franklin Allen and Douglas Gale, two of the world’s top finance professors, to work together under one roof.

The two will head the Brevan Howard Centre for Financial Analysis at Imperial College Business School in London, to be launched later this week. The centre has been financed through a £20.1m gift from Alan Howard, founder of the hedge fund and an alumnus of Imperial College – he studied chemical engineering there for four years.

Why join the Brevan Howard centre?

“Brevan Howard gave a lot of money so there is an opportunity to do something really important,” says Prof Allen. “He [Alan Howard] is an ideal donor: he just wants excellence.”

“We could do the work we would like to do and have the centre around us, and get the people we want to work here,” adds Prof Gale. “He [Alan Howard] just wanted us to be a good academic enterprise. He really wants to help Imperial.”

The decision by Profs Allen and Gale to move from the Wharton School at the University of Pennsylvania and NYU Stern, which boast two of the world’s most prestigious finance departments, was swayed by the intellectual challenge as well as the resources available.

All the mainstream finance journals are published in the US, points out Prof Allen, with 84 per cent of articles published in the top four finance journals originating there. “The problem is that a lot of the work that gets done is not relevant to the rest of the world,” he says. “We hope to address the bias.”

Although Oxford-educated Prof Allen worked in the US for 34 years, and holds US citizenship, he argues that he and Prof Gale – a Cambridge-educated Canadian – have a different intellectual background from that which prevails in the US. “I think people who are trained outside the US think about things differently.”

How will the research be different?

Financial stability is one of the big topics the two would like to address and the issues surrounding bank-based versus market-based economies. “There was a period in the 1990s when there was a debate about market-based versus bank-based economies. These arguments have come back in the wake of the crisis,” says Prof Gale.

“In the US there is a strong bias that markets work, that having property rights and maximising profits are important,” says Prof Allen.

“To the rest of the world that is a very narrow view. One of the other things I hope the centre will focus on is things such as financing healthcare, bringing together profits and non-profits.”

Environmental issues are another topic of widespread concern, he says, and healthcare and environmental management are both issues on which other departments in Imperial excel. “Imperial is a wonderful place to do this kind of research.”

What is the role of the centre and what are plans for the future?

The two professors will be part of the finance department at the business school and will teach on both the PhD and MBA programmes, as well as running conferences.

They hope the centre will be instrumental in raising the profile of the finance department and the business school. “We want to have the best finance department in Europe,” says Prof Allen. “The business school is much younger than the rest of the university, so doesn’t have the cache of the rest of Imperial.”

What would success look like?

“If we ended up with four very good people [in the centre] and a great finance department,” says Prof Allen.

“If we have people who are here, training people and doing good work, I think that [will be success],” says Prof Gale. “I think we rise and fall by the business school and the finance department.”

“One of the things at the back of our minds,” adds Prof Gale, “Is that we want to do a good enough job for him [Alan Howard] to invest more.”

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