Richard T. Thakor
University of Minnesota, Carlson School of Management
“Associate Professor Richard Thakor is a standout researcher and instructor. He fosters a positive learning environment that encourages students to grow, helping them better understand complex topics and how to apply them to real-world situations and trending topics. He recently won the 2024 Carlson School’s Undergraduate Instructor of the Year for the Finance Department, an award nominated by students. He also won the 2022 Carlson School of Management Award for Excellence in Teaching.” – Carlson School of Management
Richard T. Thakor, 39, is Associate Professor of Finance at University of Minnesota’s Carlson School of Management. He is a Research Affiliate at the MIT Laboratory for Financial Engineering (LFE), and is a Research Affiliate at the WFA Center for Finance and Accounting Research (WFA-CFAR) at Washington University in St. Louis.
Thakor joined the finance department at University of Minnesota in 2016 after earning his PhD in Financial Economics from MIT. He also holds an M.S. in Management Research from MIT, an MSc in Finance and Economics from the London School of Economics (LSE), and a B.A. (summa cum laude) in Economics and Psychology from Washington University in St. Louis. Prior to earning his PhD, he worked in investment management as a Derivatives Trading Analyst.
He does research in empirical and theoretical corporate finance, in the areas of R&D and innovation, healthcare finance, financial institutions, and the effects of financial frictions on firm investments. He has published numerous academic articles in leading economics, management, and finance journals, and has won multiple teaching awards.
Thakor is a co-author (with Professors Zvi Bodie and Robert C. Merton) of a new Finance textbook, Principles of Finance, available in early 2025 that takes a new approach to teaching foundational concepts in finance to undergraduate and MBA audiences.
BACKGROUND
At current institution since what year? 2016
Education:
- Ph.D. Financial Economics, Massachusetts Institute of Technology (MIT)
- M.S. Management Research, Massachusetts Institute of Technology (MIT)
- MSc Finance and Economics, London School of Economics (LSE)
- B.A. (Summa Cum Laude), Washington University in St. Louis
List of Undergraduate courses you teach: Principles of Corporate Finance
TELL US ABOUT LIFE AS A BUSINESS SCHOOL PROFESSOR
I knew I wanted to be a business school professor when: I was working in a finance job, and found that I missed deeply exploring questions of my own through research, and having the ability to explain and teach that knowledge to others.
What are you currently researching and what is the most significant discovery you’ve made from it?
I’ve been conducting research recently at the intersection of healthcare and finance. Healthcare—both through the development of new therapies as well as the delivery of those therapies to patients—is essential to the health and economic wellbeing of people, and also the functioning of the economy given that healthcare comprises roughly 20% of U.S. GDP.
My research in this area has shown how important finance can be to healthcare. First, when it comes to developing new therapies, the large costs of drug development necessitate reliance on external financing, which creates a strong link between the prospects of drug development firms and financial markets. Furthermore, the institutional features of drug development end up amplifying financing frictions, distorting investment decisions and leading to not enough investment in potentially valuable therapies that society needs.
Second, the delivery of therapies and treatments to patients is also connected to financial markets; for example, my research has shown that a reduced ability of hospitals to get loans can result in reduced healthcare quality for patients. An exciting extension of this line of research is the potential for financial innovation to overcome the difficulties noted above and improve healthcare outcomes, both from healthcare development and healthcare delivery standpoints, something that I am actively continuing to explore.
If I weren’t a business school professor, I’d be: I used to work in investment management, so I would likely be in a role there.
What do you think makes you stand out as a professor? My teaching approach. My philosophy is that even complicated topics in Finance can be understood by students through taking an approach that can be distilled into three main components:
- Establishing a core “toolkit” rooted in finance theory that forms the foundation of the course and the subsequent lens through which the topics of the course are learned.
- Using that toolkit to understand investment and financial decisions by companies
- Providing a supportive classroom environment that encourages students to learn, ask questions, and also connect what they have learned to practical applications in the real world.
Through this, students practice critical thinking with applying financial tools—understanding their advantages as well as limitations—rather than just blindly using mathematical formulas, and students feel comfortable asking questions when something is unclear.
One word that describes my first time teaching: Intimidating. The first time I had to teach was when I was a graduate student, and I had taught a section full of executives. It went well, but I was nervous walking into it!
Here’s what I wish someone would’ve told me about being a business school professor: Balancing time between teaching and research can sometimes be tough, but both sides are very rewarding.
Professor I most admire and why: Robert C. Merton. He was an advisor of mine during my doctoral studies. He is a Nobel Laureate in Economics, but despite all of his achievements, I remember how he would still be working hard late at night in his office many nights and he would always be willing to set aside significant amount of time to talk with me. His dedication and generosity continue to be inspiring, and I’m privileged to continue to be able to work with him on research and in writing a Finance textbook, Principles of Finance.
TEACHING BUSINESS SCHOOL STUDENTS
What do you enjoy most about teaching business students. I greatly enjoy the ability to impart tools and knowledge to students which they can then apply in the real world. Some of the most rewarding moments that I’ve had were when former or current students have noted how the things they learned in the classroom have come up in jobs or in various situations in their lives, and they better understood how to deal with them. It is also rewarding when students are able to understand concepts that were previously intimidating to them.
What is most challenging? For many students, Finance is a difficult subject because it requires a mix of quantitative and qualitative analysis—for example, solving a problem requires the use of formulas as well as an intuitive understanding of what different inputs into the formulas mean. This can make engagement intimidating to students in a classroom environment, and sometimes it can cause students to not want to engage, which makes learning challenging. I try in my teaching approach to be open and receptive to students, and also to foster additional participation by students who may otherwise not be comfortable participating.
In one word, describe your favorite type of student: Engaged. A student that puts in the work to learn the material, and actively asks questions and seeks help if something doesn’t make sense.
In one word, describe your least favorite type of student: Unmotivated. A student that does not put in the effort to understand the material or engage in the class.
When it comes to grading, I think students would describe me as: Balanced
LIFE OUTSIDE THE CLASSROOM
What are your hobbies? I enjoy spending time with my wife and two young kids, and we travel frequently. I also enjoy skiing, mountain hiking, and martial arts—I’ve trained in Tae Kwon Do, American Karate, and Kendo; I hold a black belt in Tae Kwon Do, and a black belt in Karate.
How will you spend your summer? We will likely spend time traveling and visiting family.
Favorite place(s) to vacation: Colorado and Alaska
Favorite book(s): The Armchair Economist, which has lots of fun anecdotes applying economics to everyday life.
What is currently your favorite movie and/or show and what is it about the film or program that you enjoy so much? It’s hard to pick and I have a number of favorites, but I’ll choose my favorite Finance-related movie: Other People’s Money. The movie revolves around the takeover of a company by an investor. It’s starring Danny Devito and has great acting, is funny, but also teaches some useful insights about Finance.
What is your favorite type of music or artist(s) and why? I often like listening to smooth jazz or classical orchestral music as a way to relax.
THOUGHTS AND REFLECTIONS
If I had my way, the business school of the future would have much more of this: an effective integration of AI into learning, so that students can use AI as a learning tool but understand its limitations and how to effectively apply it when students understand the core fundamental concepts of subjects.
In my opinion, companies and organizations today need to do a better job at: articulating their core higher purpose and function, beyond just making money, to both employees and customers.
I’m grateful for: The ability to keep doing what I love with teaching and research. And that’s due to the support of my colleagues at the Carlson School, and of course my family.
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