Financial development, financial institutions, political economy, behavioral economics
Home Faculty and Research Paola Sapienza
Paola Sapienza
FINANCE
Professor of Finance, Zell Center Faculty Fellow
Paola Sapienza is a Professor of Finance at the Kellogg School of Management. She also serves as a faculty fellow for the Zell Center for Risk Research, a research affiliate of the Center for Economic Policy Research and a faculty research fellow in the National Bureau of Economic Research's program in corporate finance and political economy.
Sapienza’s areas of expertise include banking and financial institutions, behavioral economics, behavioral finance, corporate finance, emerging markets and regulation of financial markets. Sapienza has written articles on banking, social capital, trust and financial development. Her work has been published in such journals as the American Economic Review, the Quarterly Journal of Economics, the Journal of Finance, the Journal of Financial Economics, and Science. She won the 2002 Nasdaq award for best paper in capital formation (with Guiso and Zingales).
In 2009, Sapienza launched the Chicago Booth/Kellogg School Financial Trust Index, a measure of confidence Americans have in the private institutions in which they can invest their money, along with Luigi Zingales (University of Chicago Booth School of Business). It is calculated quarterly on a sample of 1,000 American adults. This index was created as a means to study the changes in trust in the financial industry and its impact on investors’ decisions. Information about the study's core topics (e.g. trust) is gathered quarterly; in different quarters, this information is supplemented with data on additional topics (e.g. real estate investment, opinion about recent events). For more information, visit : www.financialtrustindex.org.
Prior to joining Kellogg, Sapienza worked as an economist in the research department of Bank of Italy. She received a bachelor's degree in economics summa cum laude from Università Bocconi in Italy, and an MA and PhD in Economics from Harvard University.
Behavioral Economics (Includes: Behavioral Finance)
Behavioral Finance (Includes: Behavioral Economics)
Corporate
Emerging Markets
Regulation of Financial Markets
Sapienza’s areas of expertise include banking and financial institutions, behavioral economics, behavioral finance, corporate finance, emerging markets and regulation of financial markets. Sapienza has written articles on banking, social capital, trust and financial development. Her work has been published in such journals as the American Economic Review, the Quarterly Journal of Economics, the Journal of Finance, the Journal of Financial Economics, and Science. She won the 2002 Nasdaq award for best paper in capital formation (with Guiso and Zingales).
In 2009, Sapienza launched the Chicago Booth/Kellogg School Financial Trust Index, a measure of confidence Americans have in the private institutions in which they can invest their money, along with Luigi Zingales (University of Chicago Booth School of Business). It is calculated quarterly on a sample of 1,000 American adults. This index was created as a means to study the changes in trust in the financial industry and its impact on investors’ decisions. Information about the study's core topics (e.g. trust) is gathered quarterly; in different quarters, this information is supplemented with data on additional topics (e.g. real estate investment, opinion about recent events). For more information, visit : www.financialtrustindex.org.
Prior to joining Kellogg, Sapienza worked as an economist in the research department of Bank of Italy. She received a bachelor's degree in economics summa cum laude from Università Bocconi in Italy, and an MA and PhD in Economics from Harvard University.
Areas of Expertise
Banking and Financial InstitutionsBehavioral Economics (Includes: Behavioral Finance)
Behavioral Finance (Includes: Behavioral Economics)
Corporate
Emerging Markets
Regulation of Financial Markets
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Representative Work
"The Role of Social Capital in Financial Development"
"Cultural Biases in Economic Exchange"
"The Effects of Banking Mergers on Loan Contracts"
- Recent Media Coverage
Handelsblatt (Germany): Testosteron und Finanzen - 11/9/2009
USA Today: More walk away from homes, mortgages - 11/3/2009
Huffington Post: Naissance Capital: New Fund Invests In Companies With Female Managers, Anticipates High Returns - 10/27/2009
DS News: Negative Equity Prompts 'Strategic' Mortgage Defaults: Study - 10/27/2009
See all Kellogg in the Media
- Recent Kellogg News
Trust in stock market stabilizes - 10/19/2009
Gender, testosterone and financial risk - 8/24/2009
‘A trust crisis’ - 1/27/2009
Deal or no deal? - 11/25/2008
See all Kellogg News
Education
PhD, 1998, Economics, Harvard UniversityMA, 1993, Economics, Harvard UniversityLaurea, 1989, Economics, Bocconi University, Milan, Summa Cum Laude
Academic Positions
Professor, Finance, Kellogg School of Management, Northwestern University, 2009-presentFaculty Affiliate, International Organizations & International Law (IO/IL) Working Group, Buffett Center for International and Comparative Studies, Northwestern University, 2008-presentResearch Fellow, Centre for Economic Policy Research, 2007-presentResearch Associate, National Bureau of Economic Research, 2007-presentFaculty Fellow, Zell Center for Risk Research, Northwestern University, 2006-presentFaculty Fellow, Center for International Economics and Development, Northwestern University, 2000-presentFaculty Affiliate, Roberta Buffett Center for International and Comparative Studies, Northwestern UniversityFord Visiting Associate Professor, Finance, Booth School of Business, University of Chicago, 2008-2009Associate Professor, Finance, Kellogg School of Management, Northwestern University, 2006-2009Visiting Fellow, GSB Initiative on Global Markets, University of Chicago, 2009-2009Faculty Research Fellow, National Bureau of Economic Research, 1999-2007Research Affiliate, Centre for Economic Policy Research, 1998-2007Assistant Professor, Finance, Kellogg School of Management, Northwestern University, 1998-2006
Research Interests
Articles
Guiso, Luigi, Paola Sapienza and Luigi Zingales. Forthcoming. Cultural Biases in Economic Exchange. Quarterly Journal of Economics. 124(4)
Reuben, Ernesto G, Paola Sapienza and Luigi Zingales. Forthcoming. Is Mistrust Self-Fulfilling?. Economics Letters.
Hochberg, Yael V., Paola Sapienza and Annette Vissing-Jorgensen. Forthcoming. A Lobbying Approach to Evaluating the Sarbanes-Oxley Act of 2002. Journal of Accounting Research.
Ravina, Enrichetta and Paola Sapienza. Forthcoming. What Do Independent Directors Know? Evidence from Their Trading. Review of Financial Studies.
Polk, Christopher and Paola Sapienza. 2009. The Stock Market and Corporate Investment: a Test of Catering Theory. Review of Financial Studies. 22(1): 187-217.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2008. Trusting the Stock Market. Journal of Finance. 63(6): 2557-2600.
Guiso, Luigi, Ferdinando Monte, Paola Sapienza and Luigi Zingales. 2008. Culture, Gender, and Math. Science. 320(2880): 1164-1165.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2008. Alfred Marshall Lecture -- Social Capital as Good Culture. Journal of the European Economic Association. 6(2-3): 295-320.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2006. Does Culture Affect Economic Outcomes?. Journal of Economic Perspectives. 20(2): 23-48.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2004. Does Local Financial Development Matter?. Quarterly Journal of Economics. 119(3): 929-969.
Sapienza, Paola. 2004. The Effects of Government Ownership on Bank Lending. Journal of Financial Economics. 72(2): 357-384.
Reprinted in:
A Reader in International Corporate Finance, edited by Stijn Claessens and Luc Laeven, 259-286. Washington, DC: World Bank Publications, 2006.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2004. The Role of Social Capital in Financial Development. American Economic Review. 94(3): 526-556.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2003. People’s Opium? Religion and Economic Attitudes. Journal of Monetary Economics. 50(1): 225-282.
Sapienza, Paola. 2002. The Effects of Banking Mergers on Loan Contracts. Journal of Finance. 57(1): 329-367.
Sapienza, Paola. 2001. The Bright Side of Internal Capital Markets: Discussion. Journal of Finance. 56(4): 1528-1531.
Working Papers
Reuben, Ernesto G, Paola Sapienza and Luigi Zingales. Procrastination and Impatience.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2008. Long Term Persistence.
Reuben, Ernesto G, Paola Sapienza and Luigi Zingales. Time Discounting for Primary and Monetary Rewards.
Sapienza, Paola, Anna Toldra and Luigi Zingales. 2008. Understanding Trust.
Guiso, Luigi, Paola Sapienza and Luigi Zingales. 2007. The cost of banking regulation.
Book Chapters
Sapienza, Paola. 2005. "Comments on Lessons from Case Studies on Large Insolvencies." In Systematic Financial Crises: Resolving Large Bank Insolvencies, edited by Douglas D. Evanoff and George G. Kaufman, 391-394. New Jersey: World Scientific.
Teaching Interests
Corporate financeFull-Time / Part-Time MBA
Finance II (FINC-441-0)This course counts toward the following majors: Analytical Finance, Finance.
This course is the sequel to FINC-430. The primary objective is to examine the financial decisions of firms with regard to their capital budgeting decisions (which investments to make), dividend decisions and capital structure decisions (how to raise capital). We first examine these decisions in an idealized frictionless world in which the firm cannot change its value by altering its dividend or capital structure policy. We then explore the effect of frictions (e.g. taxes, bankruptcy costs, inefficient or uncompetitive financial markets, or self-interested managers) on the firm's financial decisions and how these decisions can affect a firm's value.
Prerequisites: FINC-430. Corequisite: DECS-434 or equivalent. ACCT-430 and MECN-430 are recommended.
Doctoral
Empirical Corporate Finance (FINC-489-0)This course counts toward the following majors: Finance
This course prepares Ph.D. students to do research in empirical corporate finance. The course is organized around published and working papers in the field with an emphasis on econometric methods. Rather than providing an exhaustive overview of the field, the course focuses on selected topics in depth to illustrate different empirical approaches to the same or related questions. Using papers on corporate finance, the course highlights the following empirical themes: endogeneity, difference in difference estimators and event studies.
General Seminar for PhD Candidates (FINC-520-0)
Current research in topics such as international finance, empirical finance, capital structure and financial markets are analyzed. The seminar usually requires in-class presentations by students, as well as individual research projects.
CONTACT INFO:
PHONE: 847-491-7436
FAX: 847-491-5719
PHONE: 847-491-7436
FAX: 847-491-5719
OFFICE:
Jacobs Center Room 4228
Jacobs Center Room 4228
