Nikunj Kapadia Named Chair of the Finance Department
September 25, 2020
Newly named Isenberg Department of Finance chair Nikunj Kapadia has been a professor at the school since 1996. His research, which has appeared in The Journal of Finance, The Journal of Financial Research, and other publications, spans options pricing, volatility, and credit and default risk. In the classroom, he teaches financial modeling, international finance, and financial engineering to undergraduates and a seminar on options to PhD candidates.
“To date, my most influential contribution to financial research has been to show that the volatility component of financial assets is itself priced,” observes Kapadia, who earned his PhD from NYU in 2005. (His MBA is from the Indian Institute of Management in Bangalore.) Focusing on financial options, Kapadia was able to parse volatility from overall price by observing back-and-forth trading behavior. Kapadia practices what he researches: “I manage my own portfolio by selling volatility,” he remarks.
In current research, Kapadia has joined forces with Isenberg finance professor Matt Linn in an examination of high-frequency, algorithmic trading. “The algorithmic orders are simply too fast for human beings to grasp,” he observes. “We’ve found that liquidity in option markets carries greater uncertainty, greater fragility.
“All of my papers are rooted in market phenomena,” emphasizes Kapadia, who worked on Wall Street before joining Isenberg. “Immediately after my PhD, in fact, I joined short-lived Bear Stearns,” he says. “Over the years that I have been with Isenberg, the finance department has grown dramatically,” he continues. “When I joined the school in the 1990s, there were only five faculty members in the department. But with [Professors] Hossein Kazemi, Tom Schneeweis, and Nelson Lacey—who founded the Chartered Alternative Investment Analyst (CAIA) Association—we already had a core group that focused on derivatives and alternative investments. That has differentiated us and attracted exceptional students and faculty.” (Nelson Lacey retired as chair of the finance department this past summer.)
He points out that today, finance is Isenberg’s largest major, with 14 tenure and non-tenure track professors. “All of them teach undergraduates. A big draw for our undergraduates is our three investment clubs, which manage separate portfolios for equities, fixed income securities, and alternative investments. We have an exciting new master’s degree program in alternative investments. And our Center for International Securities and Derivative Markets has an increasingly high profile. As chair, I’m inheriting a department on the move.”