Bridging the Gap: Christian Opp’s Research at the Intersection of Finance Theory and Policy
The world of finance is a complex one, where market forces and regulatory decisions intertwine. Professor Christian Opp’s research focuses on these dynamics, offering valuable insights to those who study and influence the global economy. As a professor of finance and the current faculty director of the Ph.D. program at Simon Business School, Opp's research on financial institutions and market structures has earned widespread academic acclaim and influenced policy decisions by major financial regulators worldwide.
From Germany to Simon: A Career in Finance
Professor Opp earned a Diplom in business economics from the University of Mannheim in Germany, a qualification equivalent to a master's degree in fields such as engineering, economics, or social sciences. Additionally, he holds an M.Sc. in accounting and finance from the London School of Economics and Political Science.
Opp furthered his education in the US at the University of Chicago Booth School of Business, earning both an M.B.A. and a Ph.D. in finance. Before coming to Simon as an associate professor of finance in 2019, Opp was an assistant professor at The Wharton School, University of Pennsylvania.
Opp’s deep understanding of short sales, capital regulation, and financial markets hasn’t gone unnoticed. His work has been featured in some of the top academic journals. One of his co-authored papers, "Real Anomalies," earned the Journal of Finance Dimensional Fund Advisors Distinguished Paper Prize and the Jacobs Levy Center Outstanding Research Paper Prize. His recent research has earned him honors including the Best Paper Award at the Annual Conference in Financial Economics at IDC-Herzliya and the Northern Finance Association Best Paper Award in Corporate Finance and Financial Intermediation, among others.
Beyond his academic roles, Opp stays busy as a Research Associate at the National Bureau of Economic Research. His passion for finance research is driven by his commitment to advancing academic theory and also delivering practical implications for financial markets and regulatory frameworks.
"I'm happy if a project gets the response of 'Okay, this is valuable for us,’ from practitioners.” said Opp. “I’m motivated asking and answering questions like, ‘How does this affect consumers, investors or firms?’”
Analyzing the Power and Risks of Short SellingA recent paper Opp co-authored with former Simon PhD student Shuaiyu Chen ’21S (PhD), who is now an assistant professor at Purdue University, and Ron Kaniel, the Jay S. and Jeanne P. Benet Professor of Finance at Simon, delves into the complexities of the short sale market. Short selling, a practice where investors bet against a stock by borrowing and selling it with the hope of repurchasing it at a lower price, plays a crucial role in maintaining market equilibrium. | 
“The question for us is how the market is set up for short selling and whether that is efficient, said Opp. “We provide insight as to whether regulation is necessary or not and why.”— Christian Opp |
Opp’s paper highlights the consequences of not participating in securities lending, revealing that investors who refrain from lending their securities miss out on substantial value, especially when investing in smaller companies. His research also raises critical questions about the efficiency of the short sale market, given the concentration of power among a few large institutions that dominate securities lending. This market power prompts concerns about the need for regulatory intervention.
“The question for us is how the market is set up for short selling and whether that is efficient, said Opp. “We provide insight as to whether regulation is necessary or not and why.”
Understanding Capital Regulation:
In addition to his work on short sales, Christian Opp has made substantial contributions to studying capital regulation pivotal to financial stability and market efficiency. Capital regulation mandates that banks maintain a sufficient capital "cushion" to absorb losses and prevent default. This regulation is essential to prevent cascading failures within the financial system, where the collapse of one bank could trigger a domino effect, impacting other financial institutions and the wider economy.
Opp’s research explores how changes in capital regulation impact different types of borrowers, particularly highlighting the heterogeneous effects on small businesses versus larger firms. Questions arise about how small businesses, often reliant on bank loans due to limited access to public markets will be affected by capital requirements versus larger firms, which can tap into public bond and equity markets.
“We need to think about how a single regulatory tool affects different market players and borrowers. We’ve developed a framework that helps policymakers understand the impact of changing capital requirements, and our discussions with policy makers suggest that they do find it useful,” said Opp.
Emissions, Supply Chains, and Global Policy
Looking forward, Opp is venturing into new territory with research on emissions and global supply chains—something students and alumni currently involved in sustainability or supply chain management can relate to.
By tackling the complexities of international emissions regulation, Opp aims to provide valuable insights that could drive more effective environmental policies on a global scale.
“I’ve been working recently on a project that seems more tangentially related to finance. It's about global warming, largely emissions,” said Opp. “I'm European, from Germany, and my own country is very concerned with global warming and emissions. They are trying everything possible to mitigate them."
His investigation seeks to determine how countries and corporations can expand their environmental influence beyond their immediate borders by accounting for the emissions linked to their international supply chain partners. This research explores how stringent regulations on emissions disclosures might affect the accuracy and effectiveness of reporting.
“A domestic government can require emissions monitoring in its domestic factories, but it can’t impose the same on foreign producers, relying instead on voluntary disclosures. This creates a conundrum: foreign partners may underreport their emissions to avoid penalties, leading to inaccurate global emissions data.”
Impacting and Influencing Policy and Regulators
Opp’s engagement with regulatory institutions like the Federal Reserve, European Central Bank (ECB), and the Bank of Canada underscores the importance of academia's role in shaping financial policy. He has contributed directly to the ongoing dialogue about market structure and regulatory efficiency.
“I’ve had many interactions with policymakers, who are very interested in our work because they need to predict how a complex financial system will respond to regulations,” said Opp. “It’s a challenging task, so they appreciate seeing different perspectives.”
Alumni working in corporate finance or investment may find one of Opp’s recent papers, 'To Pool or Not to Pool? Security Design in OTC Markets,' notably pertinent when structuring financial products or evaluating investment opportunities. The paper is another example of how Opp’s research can be applied in practice and examines the conditions under which pooling securities, such as collateralized loan obligations and mortgage-backed securities, is beneficial. The findings of this paper are particularly relevant in the aftermath of the financial crisis of 2007-2009, where the pooling of mortgages played a significant role.
“‘To Pool, or Not to Pool’ is about the benefits and downfalls of creating these big pools of securities and selling them as tranches or securities based on the whole pool versus separately selling these securities,” said Opp. “Our analysis is, again, a lot about information and informational advantages that sellers often have.”
Advancing Financial Research for Global Impact
As Professor Opp reflects on his work, he envisions a continued exploration of how financial institutions, such as banks, venture capital funds, and rating agencies, shape investment decisions and broader economic outcomes. Ultimately, he wants to make sure policy decisions are well-informed and beneficial for everyone involved in the economy.
Opp’s vision for the future of financial research continues to bridge theoretical knowledge with practical applications— ensuring that financial systems are stable and efficient while addressing emerging global challenges.
"Ultimately, I’m driven by the question of how the financial sector’s structure affects the real economy,” said Opp. “If my research sheds light on these connections and helps improve how we think about regulation, that really motivates me."