Background Information

Research and Teaching

• HBS Exec Ed
• HBS MBA-JD Course
• D2D Fund
• Savings
• Savings Bonds
• Prize-Linked Savings
• Tax Refunds
• Financial Attitudes and Skills of Consumers
• Payments
• Credit
• Selected CF Research Organizations

Mutual Funds

Financial Engineering, Financial Innovation and Risk Management

Other

Harvard Information

Charities to Consider

CONSUMER FINANCE

Consumer finance is an important field that studies the markets, institutions, products and services that deliver financial services to households.  My work involves a combination of empirical research, field based research, course development and, with partners, product development and testing. 

Consumer Financial Services - HBS Executive Education (2008).   HBS will be offering an executive education program on "Consumer Financial Services: New Models for Success" on November 2-7, 2008.  For more information about the program, click here.

Consumer Finance - Harvard MBA/JD Elective (2009).  In January 2009, Peter Tufano and Howell Jackson (HLS) will be launching a course on Consumer Finance.  This course will be jointly listed at HBS and HLS.  For a course description, click here.

D2D Fund: D2D Fund, Inc. (Doorways to Dreams) is a nonprofit whose mission is to use financial innovation to help low income families build assets and successfully engage the financial service sector.  Tufano formed D2D Fund and serves as its President.  The Tower Group issued a report entitled "D2D Fund: Bringing Dreams to Reality in the Low-Income Marketplace," on D2D Fund's work in May 2006.   There is an article on D2D by Robert Shiller from Yale in one of his syndicated columns. Some of the links below are to research done by Tufano's colleagues at D2D.

Research and Course Development

General Savings

• "Using Financial Innovation to Support Savers: From Coercion to Excitement," with Daniel Schneider. Pre press version, forthcoming in Access, Assets and Poverty, ed. Rebecca Blank and Michael Barr (Russell Sage, 2009).
• "New Savings from Old Innovations: Asset Building for the Less Affluent," with Daniel Schneider. Pre-press version, published in Financing Low-Income Communities, ed. Julia S. Rubin (Russell Sage 2007).

Savings Bonds:  In our work on savings programs, we have been investigating how the well-proved US Savings Bond program could be reinvigorated to support savings by low income families.  The papers below represent part of our findings.

• Coming soon: Full results of 2007 savings bond experiment.

• "Just Keep My Money, Part I."  Rev. April 2007.  The findings of a pre-pilot program to offer U.S. Savings Bonds to tax recipients to stimulate savings.  The full pilot was conducted in January-April 2007. There are two D2D reports on the outcomes of these experiments.

  • "America's Best Kept Saving Secret: Testing U.S. Savings Bonds to Help Low-income Tax Filers Begin Saving" A Working Paper by Jeff Zinsmeyer & Timothy Flacke, May, 2007. (PDF)
  • "Tax Time Savings: Testing US Savings Bonds at H&R Block Tax Sites." Preliminary Report by Nick Maynard, June, 2007. (PDF)

• "Reinventing Savings Bonds," with Daniel Schneider (HBS).  Published in Tax Notes, October 31, 2005, 1-20.
• Executive Summary
• An extended version was published as a New America Issue Brief (April 2006) entitled "Reinventing Savings Bonds: Policy Changes to Increase Public Savings."

Prize Linked Savings:  Prize-linked savings, where prizes are awarded in lieu of interest, have been used since 1694, are used around the world, but are virtually unknown in the US. 

• "Saving Whilst Gambling: An Empirical Analysis of U.K. Premium Bonds," American Economic Review Papers and Proceedings 98,2  (May 2008.)321-326.  (pre-press version).  An extended piece with additional findings is also available.
• "Consumer Demand for Prize-linked Savings: A Preliminary Analysis,"  with Nick Maynard and Jan-Emmanuel De Neve.  This paper details the results of a market research, done in conjunction with Centra Credit Union, to explore the likely American demand for prize linked savings.
• "First National Bank's Golden Opportunity," with Shawn Cole, Daryl Collins and Daniel Schneider.  This HBS case study details the decision facing FNB bank as it was deciding whether to launch a prize based savings program in South Africa. 

Coming soon: Filene Research Institute piece on Prize Linked Savings.

Tax Refunds: For low income American families, tax refunds (much from the Earned Income Tax Credit) are potentially an important source of saving.  Our work has been to demonstrate that the savings potential of refunds can be enhanced with changes in IRS practices.  In particular, the IRS's adoption of Form 8888, which allows for the splitting of refunds to multiple destinations, is one step towards increasing tax time savings.

• "Leveraging Tax Refunds to Encourage Savings," with Sondra Beverly (University of Kansas) and Daniel Schneider (HBS).  Retirement Security Project policy brief 2005-8 (August 2005).
• This brief is part of the larger Retirement Security Project, sponsored jointly by the Pew Charitable Trusts in partnership with Georgetown's Public Policy Institute and the Brookings Institution.

• "Splitting Tax Refunds and Building Savings: An Empirical Test," with Sondra Beverly (University of Kansas) and Daniel Schneider (HBS). NBER Tax Policy and the Economy 20 (2006), 111-161.
• Executive Summary
• This research is cited in a January 31, 2005 letter from Members of Congress to the IRS, requesting that the IRS move forward on a split refunds proposal.
• Commissioner Everson's reply to Members of Congress.
• On May 31, 2006, the IRS announced that it will roll out split refunds in January 2007.
• IRS form 8888, introduced January 2007, implements the split refund concept for all Americans.

• "San Francisco Working Families Credit."  This report, written with Daniel Schneider, details the first year of the City of San Francisco's Working Families Credit, which provided low income families with augmented EITC funds.  The report provides an empirical analysis of the characteristics of program participants.

Financial Attitudes and Skills of Consumers

• "Debt Literacy, Financial Experiences, and Indebtedness"  with Annamaria Lusardi.  A new study, done in conjunction with the market research firm of TNS, that looks at the relationship between a form of financial literacy, how people transact, and their self-assessed ability to handle their current levels of debt.  (Rev May 2008).
• D2D ZMET Report on Savings.  ZMET (the Zalman Metaphor Elicitation Technique) is a new market research technique designed to uncover consumers' thoughts and feelings using visual images.  This report, done in conjunction with the Filene Research Institute, examines how low to moderate income families think and feel about savings.

Payments

• "Bouncing out of the Banking System: An Empirical Analysis of Involuntary Bank Account Closures," with Dennis Campbell and Asis Martinez-Jerez (Rev. May 2008).
• "Central Bank: The ChexSystem Qualifile® Decision," 2007 (208-029) with Dennis Campbell, Asis Martinez-Jerez and Emily McClintock Ekins.

Credit

• "Where does it go? Spending by the Financially Constrained" with Shawn A. Cole and John Thompson.  Forthcoming in Joint Center on Housing Studies book on Understanding Consumer Credit.  
• "H& R Block 2006," 2007 (307-091), with Arijit Roy and Emily McClintock Ekins.
• "EDuction," 2005 (206-006), with Daniel Schneider
• "Circle Lending," 2006 (206-137), with Nabil El Hage and Daniel Schneider
• "H&R Block's Refund Anticipation Loan: A Paradox of Profitability?" with David Rose and Daniel Schneider (HBS), Rev. Nov 2005.   A condensed version entitled "H&R Block’s Refund Anticipation Loans: Perilous Profits at the Bottom of the Pyramid?" appears in Business Solutions for Reaching the Poor, ed. Kash Rangen and John Quelch (Josey Bass 2007)    

Selected Consumer Finance Research Organizations

• The Corporation for Economic Development (CFED), a national group dedicated to Asset Building.
• New America's Asset Building initiative has a comprehensive listing of asset building policies, resources and programs.
• The Center for Social Development, Washington University, School of Social Work, a research center that had pioneered the development of Individual Development Accounts.
• The Aspen Institute Initiative on Financial Security.
• The Center for Financial Services Innovation (Shorebank Advisory Services).
• The Federal Deposit Insurance Corporation has established a Center for Financial Research, which supports research in a variety of areas.  Tufano serves as a program coordinator for consumer finance related research and is on the FDIC's Advisory Committee on Financial Empowerment.
• Harvard's Joint Center on Housing Studies

MUTUAL FUNDS

An important stream of work in the consumer finance field has been directed at understanding one of the most popular means for household savings and investing: mutual funds.

• "Mutual Fund Fees Around the World," with Ajay Khorana (Georgia Tech) and Henri Servaes (London Business School). Rev. May 2007.  This paper looks at the fees charged in a number of developing countries in 2002.  This work has received substantial attention in Canada, which we find to have the highest fees, even after controlling for various fund and family characteristics.  The Canadian fund trade association, the Investment Funds Institute of Canada (IFIC), has objected to our findings.   Our response to their critique can be found here.  Some commentators in Canada have raised other questions about our report, and our responses (May 2008), are available here.  This paper is forthcoming in the Review of Financial Studies.
• "Live Prices and Stale Quantities: T+1 Accounting and Mutual Fund Mispricing," with Michael Quinn (Analysis Group) and Ryan Taliaferro (HBS).  Rev. Nov. 2007
• "Explaining the Size of the Mutual Fund Industry Around the World," with Ajay Khorana (Georgia Tech) and Henri Servaes (London Business School). Journal of Financial Economics 78,1 (Oct 2005).  This is the pre-press version from SSRN.
• "The Costs and Benefits of Brokers in the Mutual Fund Industry," with Dan Bergstresser (HBS) and John Chalmers (U. Oregon), Working Paper.  Updated Jan. 2008
• "Board Structure, Mergers and Shareholder Wealth: A Study of the Mutual Fund Industry," with Ajay Khorana (Georgia Tech) and Lei Wedge (Georgia Tech). Rev. May 2006 .  Journal of Financial Economics 85, 2 (Aug 2007) .

FINANCIAL ENGINEERING, FINANCIAL INNOVATION AND RISK MANAGEMENT

Another stream of my work deals with corporate applications of financial engineering in the form of security design, risk management and real options.  

• Global Survey of Corporate Finance:  In 2005, Tufano and Henri Servaes (London Business School) conducted a survey of CFOs around the world concerning the corporate finance function, including details on the firm's capital structure, liability management, liquidity management, dividend/repurchase, and risk management programs.  This survey was sponsored by DeutscheBank. 
• “What Drives Corporate Liquidity?  International Evidence from Survey Data on Strategic Cash and Lines of Credit,” with Karl V. Lins and Henri Servaes (Rev. November 2007).
• "Ranking Risk and Finance," with Henri Servaes, Financial Times (June 9, 2006).
• Correction to "A Real World Way to Manage Real Options" with Tom Copeland, Harvard Business Review, March 2004.  There is a graphic on page 95, which is the binomial tree for the project.  The leftmost node reads "77>321-400."   The number "321" should read "371."  For those of you working through the math, sorry for this typo.
• "Financial Innovation," in The Handbook of the Economics of Finance, ed. George Constantinides, Milton Harris and Rene Stulz (2004).
• "When are real options exercised? An empirical study of mine closings,"   with Alberto Moel.  Published in Review of Financial Studies 15 (2002), 35-64
• "Cephalon, Inc.: Taking risk management theory seriously," with George Chacko and Geoff Verter. Published in the Journal of Financial Economics 60 (May/June 2001), 449-486.  Abridged version  in the Journal of Applied Corporate Finance.
• Technical appendix available.
• The Corporate Financial Engineering Course at HBS focuses on how corporations can use financial engineering to advance their goals and strategies.  The course studies the use of financial engineering to structure financing vehicles, to implement risk management strategies and to carry out strategic transactions.  Tufano developed this course and teaches it in the MBA program at HBS.  Some of these materials are included in the book, Cases in Financial Engineering.
• The Global Association of Risk Professionals (GARP) is a professional organization of more than 50,000 risk professionals worldwide.  Tufano serves as a Trustee of GARP, sits on its Executive Committee, and is the Chair of the Editorial Board of the GARP Risk Review.

MBA TEACHING MATERIALS

• Finance2:  Beginning in 2000, HBS launched a new year-long required finance course for all of its MBA students.  This new course was an area-wide effort coordinated by Rick Ruback and Peter Tufano, and it has created a large number of new case materials. Many of the new case materials are available in Case Problems in Finance (McGraw Hill, 2004)
• FEN-Educator:  FEN-Educator is one of the on-line abstracting journals published by the Social Science Research Network (SSRN) .  The journal's mission is to provide provide information to educators in Finance, and to help bridge the gaps between research, practice and teaching.  The Co-Editors are Robert Bruner (Darden), Kent Womack (Cornell) and Peter Tufano.

HARVARD INFORMATION

• HBS Finance Area
• Harvard Business School
• Harvard University

CHARITIES TO CONSIDER

There are many wonderful nonprofits and charities which deserve your support.  If you are interested in supporting the work of D2D Fund, click here.  Also, in August 2008 Tufano will again be a rider in the Pan-Mass Challenge, a 160+ mile bike ride to raise money for the Jimmy Fund, which supports cancer research.  100% of all donations go to the Jimmy Fund.  If you would like to support the Jimmy Fund through the PMC, click here.