When we launched the MFin in 2008 I think most of us had in mind as typical students people who were looking for jobs in the private sector. It was partly the fact that it is a “premium fee” (i.e. expensive) course and partly a lack of imagination on my part. I thought that public sector financial institutions would continue to recruit economics graduates or MBAs.
But, to my pleasant surprise, we have a steady stream of public/official sector recruits to the MFin and we have increasing numbers leaving for public/official sector jobs. (I’m excluding here state-owned banks in China and elsewhere that are partly privatised or mainly commercial in nature).
So far we have had students from the central banks of: Japan, China, Singapore, Saudi Arabia, Austria and Malaysia, plus the Ministry of Finance in Tokyo, the African Development Bank and the IFC (International Finance Corporation, the private sector arm of the World Bank). And we hope to admit a student from the central bank of Indonesia next year. Many of these students were sponsored and have returned to those institutions. Additionally MFin graduates have gone to work at the central bank of Cyprus and the IFC and another is now at the IMF.
In hindsight it’s not surprising. Central banks continue to recruit graduates with Masters or PhD degrees in economics for their macroeconomic and monetary policy activities. But they need different skills for financial stability and regulation, roles which have greatly expanded in scale and importance since the financial crisis. Economics is a close relative of finance but the typical economics masters has very little content on finance beyond pure theory of asset pricing, which is not much use if you want to understand how a modern banking system works or why certain derivatives may concentrate risk rather than dispersing it.
I can see the potential for this “stream” of the MFin to expand further and we’re thinking about how best to achieve this. We need to spend more time considering the needs of central banks, ministries of finance, regulators and development banks. And we need to think about course options that would appeal to them.
We have the advantage that the newest recruit to the Cambridge Judge Business School Advisory Board is Bank of England Deputy Governor Paul Tucker, who I met a week ago. We already have a regular speaker from the Bank of England, which will in 2013 absorb financial stability regulation with the formation of the Prudential Regulation Authority. I’ve visited the central banks of China and Singapore in the last year. And I hope to travel to the IMF and World Bank in Washington DC later this year. The Cambridge network in official sector financial institutions is very strong, mainly made up of economics graduates. It would be nice to see Cambridge MFin graduates extending this network.
Public sector employers are quite correctly under great pressure to look after their taxpayer owners’ money. So we need to find scholarship funding for some of these recruits, particularly those from lower income countries. But I believe that finance can contribute very positively to economic development and we hope to convince donors in future that this would be a good cause for them to contribute to.
I think candidates who come from or go to the public sector have a higher propensity to want to pursue a PhD in the future. Indeed, to ascend the ladder in many of the aforementioned organizations, a PhD is a requirement. It may be helpful to add an optional but accredited research component to the programme to allow for those who may wish to follow this route.
It is already possible to do a supervised academic dissertation in the summer, which can be used to start working on a future PhD. It’s true that many central banks value PhDs, though this is less true of the international financial organisations which mainly only require a masters.