Raghuram Rajan, a professor of finance at the University of Chicago Booth School of Business and the Indian government’s Chief Economic Adviser, has been named Governor of the Reserve Bank of India, the school announced today. While in this post, Rajan will be on leave from the university.
In August 2012, Rajan was named Chief Economic Adviser to the Indian government. Since then, he has continued to be associated with the school and university, while restructuring his academic commitments to meet his responsibilities in India. Previously, from 2008-2012, Rajan served as an honorary economic adviser to Prime Minister Manmohan Singh while he continued teaching and doing research at Booth full time.
Rajan will replace Duvvuri Subbarao, who is stepping down after his five-year term ends September 4.
“The job of governor is one of great responsibility. I am extremely grateful to Chicago Booth and the university for being so supportive of its faculty when they undertake public service,” Rajan said.
At Booth, Rajan most recently taught an MBA course in international corporate finance and a PhD course in the theory of financial decisions.
Rajan chaired the Indian government’s Committee on Financial Sector Reforms in 2007 and 2008, and he was economic counselor and director of research for the International Monetary Fund from 2003 to 2006.
“We at Chicago Booth are very proud that one of our preeminent scholars is going to lead the central bank of a major country, and we believe this will be good for India. In turn, his experience in India will be extremely valuable to his research and his teaching when he returns,” said Sunil Kumar, dean of the school.
Rajan’s most recent position in the Indian government was similar to a post that Austan Goolsbee, another Booth professor, held in the administration of President Barack Obama. Goolsbee was chairman of the President’s Council of Economic Advisers from 2010 to 2011.
Rajan’s research interests are in banking, corporate finance and economic development, especially the role finance plays in it. His academic papers have been published in all the top economics and finance journals. Rajan was president of the American Finance Association in 2011.
Before the financial crisis struck, Rajan presented his research paper titled “Has Financial Development Made the World Riskier?” at the central bankers’ annual Jackson Hole Conference in 2005. In the paper, he concluded that serious risks to the financial system existed, and proposed policies that would reduce such risks.
Earlier this year, Rajan, Eric J. Gleacher Distinguished Service Professor of Finance at Booth, was awarded the Center for Financial Studies - Deutsche Bank Prize in Financial Economics 2013. His recent book, Fault Lines: How Hidden Fractures Still Threaten the World Economy, won the Financial Times/Goldman Sachs Business Book of the Year award in 2010, and he won the Infosys Prize for Economic Sciences.
Rajan received the inaugural Fischer Black Prize, given every two years to the financial economist younger than 40 who has made the most significant contribution to the theory and practice of finance.
He joined the Booth faculty in 1991 after he received a PhD from the Massachusetts Institute of Technology. Earlier, he received an MBA from the Indian Institute of Management in Ahmedabad and an undergraduate degree from the Indian Institute of Technology in New Delhi.