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Photo illustration of paper money of different nationsUK's Business and Economic Programs Banking on Change

by Debbie Gibson

In November 1998 the largest bank in the world was formed when Deutsche Bank, headquartered in Frankfurt, Germany, purchased the New York City-based Bankers Trust. It was the largest acquisition of a United States bank by a foreign investor in history and yet another harbinger of true global banking.

When the "Asian tigers" abruptly lost their economic bite last year, the fallout was felt almost as quickly in the United States. U.S. corporations laid off workers as orders slumped. The U.S. stock market gyrated wildly, and millions of individual investors began turning to the financial page before the sports section, in an attempt to understand how the price of goods in Japan was affecting their retirement account.

Once of interest only to business executives and financial types, Alan Greenspan and the Federal Reserve are now household names. While the paparazzi do not stalk him yet, Greenspan's every utterance is monitored and analyzed; and today, plumbers pay as much attention to how the financial world turns as politicians.

In short, the once stable and staid world of business and economics has become complex, confusing, and ever-changing, with threads from national economies woven together as tightly as a luxury necktie and a broad, informed perspective as essential as a good briefcase.

It is into this new age of commerce that graduates step from UK's Carol Martin Gatton College of Business and Economics. A new program called the Research Challenge Initiative will help them enter with the depth of knowledge and understanding essential for success today.

Enhancing Research
That understanding is based on solid research. And in the Carol Martin Gatton College of Business and Economics, research is at the heart of Dean Richard Furst's vision for how the initiative will have a domino effect-enhancing everything from student preparedness to economic development in the Commonwealth.

Photo of Richard Furst"Our graduates are leaders throughout the state. If you choose any county, nine out of 10 times you will find graduates of UK in positions of leadership. The quality of these leaders and the education these people received as students impact the economy of our Commonwealth." --Richard Furst

The first domino will come in the form of new faculty members, each bringing strong research backgrounds and expertise which Furst and his colleagues have identified as crucial to both the college's and the students' future. By bringing nationally known faculty in these areas to the Gatton College, Furst says UK will be able to compete with schools such as Indiana University and Ohio State even though UK receives significantly less funding than those schools do. An infusion of new faculty will trigger the other dominos, bringing more research monies, more opportunities for graduate students, and more benefits to the state's economy.

Mirroring the Way of the World
Venture capital and private equity finance are good examples of essential areas that will be added at UK. Venture capital firms and private equity finance provide money for start-up and expanding companies, giving companies the financial wherewithal to buy equipment, hire employees, and do the research and development needed to compete in the global economy.

However, there is only sparse research on many aspects of these vital business components. In addition, venture capital funding is vitally important in the emerging market economies, and the area is highly multidisciplinary-drawing on finance, economics, management, law, and global business.

It is no coincidence that one of the new faculty members will have strong credentials in these specialties. Steven Skinner, director of the School of Management and the Warren W. Rosenthal Professor of Marketing, heads this search committee.

According to Skinner, adding this expertise will allow students in the college to take a more multidisciplinary approach in their studies, an approach which mirrors what is going on in the world.

Photo of Steven SkinnerSteven Skinner is the current Warren W. Rosenthal Professor of Marketing.

"The issues students face now are more global and cut across different disciplines," Skinner says. "For example, the financial and monetary problems facing countries such as Russia also cut across political and cultural lines. They are systems problems. They are more complex and require a broader perspective. This new position will really help us give our students that perspective and help us offer some graduate programs which might lead to Ph.D. dissertations that consider problems from a multidisciplinary approach."

The process has already had another positive effect, Skinner says.

"This whole initiative has caused us to evaluate where we want to be and has refocused our thinking on research," Skinner says. "It is almost a renewal since it has us talking about how all our departments fit together and what impact that has for students. That can only be good, only boost an already good program. It is a real opportunity."

Don Mullineaux, the Dupont chairholder in banking and financial services, heads another committee, this one looking for a specialist in the area of international economics, finance, and/or banking. The new faculty member will work with Ph.D. students in both economics and finance, and will be responsible for strengthening the college's grant activities in Central and Eastern Europe and Asia.

Photo of Don MullineauxDon Mullineaux was working with the Federal Reserve Bank of Philadelphia and teaching at the Wharton School of Business and at Temple University before he came to UK.

"The whole field of banking is changing dramatically," Mullineaux says. "The same is true for the money and capital markets. Both are much more global. We increasingly see U.S. firms borrowing money abroad and foreign firms borrowing funds here by issuing bonds. However, currently there is no one teaching or doing research in the field of international banking at UK. By hiring someone with expertise in this area, we may be able to offer courses we couldn't previously."

"This is not a Larry Bird or Michael Jordan effect," Skinner says. "We're not out there trying to get some top superstar, because we have a fine faculty already; but the fact is, you don't normally get to bring in senior-level faculty members. This is a chance we rarely get. The new faculty can make our programs even better."

Dean Richard Furst concurs. "I wouldn't trade Don Mullineaux, our endowed chair in banking, for any banking professor in the United States," Furst says.

Mullineaux was working with the Federal Reserve Bank of Philadelphia and teaching on the adjunct faculty at the Wharton School of Business and at Temple University when he came to UK. His current research interest is loan contracts, especially syndicated loans-a trillion dollar market that no one has researched deeply.

In fact, the college will ultimately be able to add some endowed chairs in addition to the three appointments for the fall of 1999.

The college already boasts one of the first endowed chairs through the Research Challenge Initiative--Christopher J. Waller--and it was the offer of an endowed chair which helped to lure Waller from Indiana University in August of 1998.

Waller's primary area of interest for the past 10 to 12 years has been the design of central banks. He delves into issues such as how the Federal Reserve or other central banks should be structured to deal with policy from a global perspective while still dealing with competing political issues. The new European Central Bank has been a particular focus, one that most economists have not looked at.

Photo of Christopher WallerChristopher Waller is one of UK's first endowed chairs appointed through the Research Challenge Initiative.

Waller also researches the question of whether local banks are important in bolstering the economy in their region and vice versa, going on the theory that the more financial integration there is in the United States and world, the less important such banks should be for the local economy since local banks can get deposits from anywhere in world and make loans to institutions anywhere in world.

Improving the Economy of the Commonwealth
Back in Kentucky, local banks are still a key to local economies, a fact supported by Waller's research, and improving that economy is still a forte of the college.

"In this college we believe that education is a key to economic development, education at all levels, including higher education," Furst says. "Our graduates are leaders throughout the state. If you choose any county, nine out of 10 times you will find graduates of UK in positions of leadership. The quality of these leaders and the education these people received as students impact the economy of our Commonwealth."

The Chellgren Endowed Professorship in Corporate Strategy

As the CEO of a major, international company, Paul Chellgren is immersed daily in corporate strategy. And now, thanks to a generous gift from Chellgren, students at UK's Gatton College of Business and Economics will have the opportunity to learn more about this key business tool.

Chellgren, CEO of Ashland Inc., recently pledged $250,000 to the Carol Martin Gatton College of Business and Economics. The pledge will be used to create the Chellgren Endowed Professorship in Corporate Strategy and to hire a senior-level professor in strategy who will teach in the college's MBA program and work with doctoral students.

"Corporate strategy tends to be more of an integrative area of study involving such important functions as accounting, finance, and production," Chellgren says. "I think it's a very important part of students' educational perspective to be exposed to leading-edge thinking. It helps students put things in context and helps them get more out of their specialized fields of study."

The pledge will also be used to increase the interaction between students and CEOs, according to Richard Furst, dean of the college.

"Paul and I have often talked about the need to bring corporate CEOs into the classroom, particularly at the MBA level," Furst says. "Part of the responsibilities of this professor will be to administer a visiting CEO series. It is important that students meet corporate CEOs and hear what they have to say. This brings to life what is in the textbooks."

Chellgren is, in fact, an example of how academics and business experience come together to create success. A graduate of UK, Chellgren has remained involved with UK throughout his business career. He currently serves on UK's Board of Trustees and will continue in that role for another four years. He also has strong ties to UK through his family and his professional relationships.

Editor's Note: The University of Kentucky has targeted management and economics as one of 11 programs to receive enhanced funding through the Research Challenge Initiative. These programs have already achieved a level of national and international distinction in areas crucial to the development of the Commonwealth of Kentucky. Enhanced funding in the form of additional faculty and staff will elevate these programs in their respective fields and advance UK toward its goal of becoming one of the country's top 20 public research universities by 2020. Endowed professorships are also part of the Research Challenge Initiative.