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.