Pauline Liang

Pauline Liang is driven by a need to learn what lies underneath the surface — not just how financial institutions function, but why. The policies and regulatory frameworks that govern our financial institutions have an impact on their ability to succeed, but so often, Liang says, we’re not asking the right questions or looking through the right data sets.

Her interest in financial systems was catalyzed by a few key experiences: a professor at her undergraduate university who recruited her to collaborate on research and a post-graduate job studying financial institutions. As a student at Stanford Graduate School of Business pursuing a PhD in finance, Liang says her interests have only deepened through her work with professors Arvind Krishnamurthy and Juliane Begenau.

While Liang is motivated by her passion for research and ultimate desire to secure a role as a professor at a research university, it wasn’t always on her mind to take the academic route. Liang is the first person in her family to attend college. She had to overcome what she calls the “information barrier” to figure out how to navigate program and grant applications, funding opportunities, and the basics of being away from home at college. Uplifting her community of first-gen students, in addition to her research pursuits, drives her.

Describe the path you took to Stanford.

I’m an immigrant student, a first-generation student, and a low-income student. I was born and raised in China in a city called Foshan. When I was in high school, my entire family immigrated to Brooklyn. So, now I call Brooklyn home because that’s where my family lives currently. Other than when I immigrated, this is the first time I’m living outside of New York and away from my family.

You spent time in the professional world before entering your PhD program. Where did your interest in finance begin?

When I arrived at college, I kind of didn’t know what to do — what to study or how to navigate the environment. Back then, I wanted to be an actuary because when I was in high school the career class suggested it. But in my junior year of college, I started working with an economics professor, which sparked my interest in research. Later on, I became my professor’s research assistant and together we worked on math experiments related to behavioral economics.

After college, I spent a year as a management consultant at McKinsey. The work was great, but by nature, it was just short-term. Every time I finished a project, I thought, “Oh, I’m just getting started.” Then, I’d have to move on to something else. In consulting, it’s mainly about breadth, rather than depth. I realized that I wanted to go back to academia because you can focus on a specific project or question for years. From there, I spent two years at New York University’s Stern School of Business working with a finance professor, mainly working on projects related to banking and financial institutions. That’s how it all started.

A lot of the financial rules at universities are unspoken, which can make it more challenging to navigate these environments. How did your experiences as an undergraduate student who was first-gen and low-income shape your perspective?

I refer to it as an “information barrier” because a lot of the rules aren’t written down, whether they’re financial rules, rules about how to find an internship, or even how to get into graduate school. That’s all information that may seem like common knowledge for students whose parents went to graduate school. Yet for a lot of the first-generation low-income students, that’s news to them. None of my family or friends had ever done a PhD and I wasn’t sure if I should do it. Even when I applied to college, I only applied to in-state public universities because I didn’t know that I could apply to out-of-state colleges. I didn’t know that even if you come from a low-income family you can go to a private university with help from scholarships and grants.

In college, a majority of my social life was tied to an organization called Student Support Services, which worked with first-generation, low-income students. I got really involved working as a mentor and tutor for the students. It became a second home for me.

Because of that, I now volunteer with ScholarMatch, an organization that helps first-generation, low-income high school students to apply for colleges. My mentee right now is a senior in high school, and I’m working with him on his college application. Looking back, most of my education journey has been tied to working with students who come from similar backgrounds; I get a lot of energy from supporting my community.

You also received the Stanford Community Impact Award this past year.

I was not expecting that! It was a surprise for me, and I was very happy to receive it. Last year, I was the treasurer for the PhD student association. I managed the budget and organized events. I like to focus on my research, but my way of establishing work-life balance is through being part of the community.

What drew you to Stanford? What about the graduate program aligned with your research interests?

I chose Stanford because of the faculty. We have a world-class faculty. I’m interested in financial intermediation and also in financial institutions’ interactions with macro-finance. My main advisor is Arvind Krishnamurthy, and I’m a teaching assistant for a class of his this quarter called “Money and Banking.” I also work extensively with Juliane Begenau, and we have a paper called The Rise of Alternatives, which studies public pensions investments in alternative assets like private equity and hedge funds.

Can you talk a bit about what you’ve learned and how you’ve pursued your work while at Stanford?

In order to do good research, you need a few things, starting with a good research question and robust research methodology. Importantly, you need data that offers a good level of detail. My generation of researchers is very lucky because we’re able to access granular data that previously wasn’t available. For instance, if I’m looking at historical data from the financial crisis in the 1980s, I can compare data from that so-called ‘great inflation period’ to today, because we’re facing many of the same challenges. Even for the research I’m pursuing now, getting the granular data really opens up our research methodology.

I’m curious about using granular data to identify causal relationships because once you do that, you can evaluate policy proposals and policy implications. For instance, with banking, what we have now is a lot of policies that we don’t really know how effective they are. By identifying and understanding a causal relationship, we can quantify the effect of a policy on a particular area of the economy. Then, once we see how large that impact is, we can move forward and evaluate whether or not we should impose a similar policy or regulation.

You’re also working on your dissertation. Can you share a bit about what you’re researching?

I’m just now getting started. My research interest is mainly in financial and banking institutions. After the collapse of the Silicon Valley Bank, more and more researchers are interested in financial institutions. We want to understand what the root causes of these failures are. Is the problem related to how SVB ran their bank, or is it about something bigger? For instance, is it a specific feature of the banking business that caused SVB’s banking crisis? As researchers, we want to understand what drove the collapse of SVB. This is what I want to focus on for my dissertation: the financial institution, its related business, and how the banking sector interacts with macro-finance.

Photos by Elena Zhukova