Olin finance scholar Nicolae Gârleanu receives Ross Prize for research

  • February 10, 2021
  • By Jill Young Miller
  • 2 minute read

Nicolae Gârleanu, Olin professor of finance, has been awarded the Stephen A. Ross Prize in Financial Economics for the paper “Over-the-Counter Markets.”

“The paper and subsequent literature have transformed our understanding of liquidity and price determination in over-the-counter markets in which many financial assets are traded,” according to an announcement from the Foundation for Advancement of Research in Financial Economics (FARFE).

The paper was written by Gârleanu, Darrell Duffie of Stanford University and Lasse Pedersen of Copenhagen Business School. It was published in Econometrica in 2005. The authors will split the $50,000 prize.

“It is a great honor for our paper to receive this prize,” Gârleanu said.

“The association with the outstanding previous winners, the recognition of such an illustrious group of researchers as the members of the prize committee and, of course, the memory of Steve Ross—one of the fathers of modern financial economics theory and a true giant in the field­­—make it a very special award.”

The biennial Ross Prize is given to a paper published in the last fifteen years and was first awarded in 2008. FARFE established the prize in honor of the late Stephen A. Ross, the Franco Modigliani Professor of Financial Economics at MIT. It is to recognize and encourage significant contributions to research in financial economics.

Over-the-counter trading is an important and often dominant mode of trading in many markets, including the markets for government, corporate, and municipal bonds, mortgage-backed securities, repos, interest rate swaps, currency forwards, and many other types of derivatives, according to the announcement. In contrast to centralized markets, traders in over-the-counter markets must search for counterparties and bargain over the terms of trade.

“The award-winning paper captures the effect of these frictions in a search-theoretic model, building on the framework used previously in the context of labor markets and monetary economics.”

Given the central role of over-the-counter markets, the liquidity of such markets has been of concern to policymakers and the focus of policy interventions, especially in times of crisis, such as during the Global Financial Crisis and the disruptions in financial markets at the onset of the COVID-19 pandemic. The award-winning paper paved the way to improved understanding of the functioning of these markets.

Founded in 2006, FARFE is a consortium of finance academics and practitioners from around the world. It is committed to supporting research in financial economics and to facilitating productive interaction between research and practice in finance.

About the Author


Jill Young Miller

Jill Young Miller

As research translator for WashU Olin Business School, my job is to highlight professors’ research by “translating” their work into stories. Before coming to Olin, I was a communications specialist at WashU’s Brown School. My background is mostly in newspapers including as a journalist for Missouri Lawyers Media, the Atlanta Journal-Constitution, The Washington Post and the Sun-Sentinel in South Florida.

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