Research on Financial Fragility


Itay is a Professor of Finance at the Wharton School. He is also the coordinator of the PhD program in Finance. He has been on Wharton’s faculty since 2004. He is an expert in the areas of corporate finance, financial institutions, and financial markets, focusing on financial fragility and crises and on the feedback effects between firms and financial markets. His research has been published in major academic journals, including the Review of Economic Studies, the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, and the Journal of Economic Theory. Itay’s research has also been featured in the popular press in the Financial Times, Bloomberg, Forbes, National Public Radio, and others. He is an editor of the Review of Financial Studies and has been an editor of the Finance Department at the Management Science as well as an editor of the Journal of Financial Intermediation.

Itay serves as an academic consultant of the Federal Reserve Bank of New York and the Federal Reserve Bank of Philadelphia, and has served as an academic consultant of the Committee for Capital Markets Regulation. He was the co-founder and the first president of the Finance Theory Group. He has taught undergraduate, MBA, PhD, and executive education courses in finance and economics. Prior to joining Wharton, Itay was on the faculty of Duke University’s Fuqua School of Business. He had also worked in the research department of the bank of Israel, where he was in charge of the analysis of the current account of Israel. He earned his BA in Economics and Accounting and his MA and PhD in Economics from Tel Aviv University.

The Wharton School
Joel S. Ehrenkranz Family Professor, Professor of Finance, Coordinator of PhD Program


PhD, TelAviv University, 2001; MA, TelAviv University, 1998; BA, TelAviv University, 1994.

Academic Positions Held

Joel S Ehrenkranz Family Professor, Professor of Finance, Professor of Economics

Other Positions (Selected)

Academic Advisor, Bank of Canada, 2015; Visiting Scholar, Federal Reserve Bank of Richmond, 2013; Academic Consultant, Federal Reserve Bank of New York, 2011 ; Academic Consultant, Committee on Capital Markets Regulation 20102012; Visiting Scholar, Federal Reserve Bank of Philadelphia, 2005 ; Visiting Scholar, Princeton University, 20002001; Economist, Bank of Israel, 19982000.

Professional Leadership (Selected)

Cofounder of the Finance Theory Group; Editor of the Review of Financial Studies; Previously Editor at Management Science and the Journal of Financial Intermediation; Coorganizer of Wharton Conferences on Liquidity and Financial Crises; Director of the Western Finance Assocation; Director of the Financial Intermediation Research Sociey; Elected Member of FARFE (Foundation for the Advancement of Research in Financial Economics); Member of FARFE Prize Committee, 2010.

Selected Press Coverage

Economist, Financial Times, National Public Radio, Forbes, Bloomberg, Ruters,, Morningstar.

Past Courses


The objective of this course is to study the major decisionmaking areas of managerial finance and some selected topics in financial theory. The course reviews the theory and empirical evidence related to the investment and financing policies of the firm and attempts to develop decisionmaking ability in these areas. This course serves as an extension of FNCE 611. Some areas of financial management not covered in FNCE 611 are covered in FNCE 726. These may include leasing, mergers and acquisitions, corporate reorganizations, financial planning, and working capital management, and some other selected topics. Other areas that are covered in FNCE 611 are covered more in depth and more rigorously in FNCE 726. These include investment decision making under uncertainty, cost of capital, capital structure, pricing of selected financial instruments and corporate liabilities, and dividend policy.


This course provides students with an overview of the basic contributions in the modern theory of corporate finance and financial institutions. The course is methodology oriented in that students are required to master necessary technical tools for each topic. The topics covered may include capital structure, distribution policy, financial intermediation, incomplete financial contracting, initial and seasoned public offerings, market for corporate control, product market corporate finance interactions, corporate reorganization and bankruptcy, financing in imperfect markets, security design under adverse selection and moral hazard, and some selected topics.

Knowledge @ Wharton

  • Is the U.S. Stock Market Headed Higher — or for a Crash?, Knowledge @ Wharton 05/02/2017
  • How the Stock Market Affects Corporate Decisionmaking, Knowledge @ Wharton 04/05/2017
  • Inflation, Interest Rates and ‘the Politics of Rage’, Knowledge @ Wharton 12/22/2016
  • Can Infrastructure Spending Be a Silver Bullet?, Knowledge @ Wharton 10/11/2016
  • Will the Crisis of Confidence at Deutsche Bank Spread?, Knowledge @ Wharton 10/04/2016
  • Burdened by High Debt, European Banks Face a Reckoning, Knowledge @ Wharton 03/02/2016
  • Will Negative Interest Rates Stimulate Growth — or Backfire?, Knowledge @ Wharton 03/01/2016
  • Do Junk Bond Defaults Signal Trouble for 2016?, Knowledge @ Wharton 01/06/2016
  • Is the Rush to Safety Making Corporate Bonds Unsafe?, Knowledge @ Wharton 09/08/2015
  • Should U.S. Investors Care about the Greek Crisis?, Knowledge @ Wharton 07/01/2015
  • The U.S. Deficit Shrank, but Will It Come Back Bigger Than Ever?, Knowledge @ Wharton 09/23/2013
  • The Financial Crisis in Retrospect: What Have We Learned?, Knowledge @ Wharton 09/18/2013
  • With Austerity Under Fire, Countries Seek a More Balanced Solution, Knowledge @ Wharton 05/22/2013
  • The Feedback Effect: How the Financial Markets Affect Decisions in the ‘Real Economy’, Knowledge @ Wharton 10/24/2012
  • A Premature Eulogy for Public Companies?, Knowledge @ Wharton 10/10/2012
  • The LIBOR Mess: How Did It Happen — and What Lies Ahead?, Knowledge @ Wharton 07/18/2012
  • Avoiding the Slippery Slope toward a Bank Run, Knowledge @ Wharton 06/13/2012
  • JPMorgan’s Big Loss: Why Banks Still Haven’t Learned Their Lesson, Knowledge @ Wharton 05/23/2012
  • The Tension between ‘Too Big to Fail’ and Moral Hazard Continues, Knowledge @ Wharton 01/11/2012
  • Is It Time for a Trading Tax?, Knowledge @ Wharton 10/26/2011
  • Lowering the Deficit: The Choices Range from Drastic to Draconian, Knowledge @ Wharton 04/27/2011
  • How the Public and Private Sector Could Work Together to Thaw a Future Credit Freeze, Knowledge @ Wharton 07/07/2010
  • Why CEOs May Want You Talking About Takeover Attempts, Knowledge @ Wharton 04/14/2010
  • Empty Pockets: What Does the Greek Debt Dilemma Mean for the Global Economy?, Knowledge @ Wharton 03/03/2010
  • ‘Too Big to Fail’: Can Regulation Control Systemic Risk?, Knowledge @ Wharton 10/14/2009
  • The Impact of Highfrequency Trading: Manipulation, Distortion or a Betterfunctioning Market?, Knowledge @ Wharton 09/30/2009
  • Not With the Plan: State Budget Woes Create a Black Hole for U.S. Stimulus Funds, Knowledge @ Wharton 08/05/2009
  • Tainted Tea Leaves: How Market Expectations Can Lead Regulators Astray, Knowledge @ Wharton 04/29/2009
  • The $2 Trillion Question: Will Investors Buy the Government’s Toxic Asset Plan?, Knowledge @ Wharton 04/01/2009
  • Are ‘Marktomarket’ Accounting Rules on the Mark?, Knowledge @ Wharton 04/01/2009
  • Has the Time Come to Nationalize Struggling Banks? Yes, but Carefully, Knowledge @ Wharton 02/18/2009
  • On the Run: Examining Patterns in Mutual Fund Redemptions, Knowledge @ Wharton 01/07/2009
  • ‘Bear Raid’ Stock Manipulation: How and When It Works, and Who Benefits, Knowledge @ Wharton 04/16/2008

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