MIT Lecture on Financial Innovations in China

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        On April 22nd, 2015, Professor
Hui Chen, from MIT Sloan School of Management, was invited to give lectures to IMBA
students of Lingnan (University) College. The topic of the lecture was Financial Innovations in China. Professor Chen delivered much
practical and cutting-edge knowledge to students and sparked warmly
conversations during the lecture. After the lecture, many students discussed
with professor about China’s stock market with full of
enthusiasm.
       


        After
a brief introduction about himself, Professor Chen introduced two drivers of
financial innovation, interest rates liberalization and RMB
internationalization. For the first part, interest rates liberalization, Professor
Chen listed some representative rates with many vivid graphs ranging from 3% to
20, to point out China’s financial problems, especially the low participation
rates in the financial market and components of financial assets.
       


        Then,
Professor Chen explained why we need to care about derivatives from problem to
solution in detail, and illustrated
Boston’s record-shattering snowfall to emphasize the importance of derivatives.
And as an interesting important part, he interpreted the option in definition
and some basic knowledge, then compared its payoff and profit with a few diagrams, which promoted the understanding of
students.
       


        At last, after reviewing
term sheet summary, Professor Chen designed a game and invited several volunteers
to join in it as players. This game simulated the decisions in the financial
market appropriately, and it is an interesting summary of the whole class which
achieved a warm reflection of all students.
        Hui Chen is an Associate
Professor of Finance at the MIT Sloan School of Management. His research
focuses on asset pricing and its connections with corporate finance. Chen is
particularly interested in the interactions between the macro economy and term
structure, credit risk, and corporate financing or investment decisions. His
recent research projects include application of business cycle models to
explain corporate financing behavior and corporate bond pricing, as well as
analysis of the effects of incomplete markets on entrepreneurial financing and
investments.