Policy Work
My policy work is closely connected to my research and therefore focuses on two areas:
(1) Private Equity & Venture Capital
(2) Bank Regulation
The projects are typically performed either for or in collaboration with government bodies, NPOs, or in self direction to address topics that might be relevant for third parties or the interested public.
Government agencies, especially regulatory and supervisor bodies, are assisted in making more informed policy choices based on academic insight. NPOs, such as think tanks or academic institutions, can seek collaborations to establish or maintain thought leadership on policy matters.
And on selected occasions, topics of current interest can be tackled to help educate the interested public, particularly financial service industry players, on the academic perspective on said topics.
Past projects I was involved in included working with the European Central Bank (ECB) on the 'Future of Banking' Task Force, the German Financial Market Stabilization Fund ('SoFFin') on the mandate and structure of bad banks, the 'Liikanen Group' on bank structural reform in Europe.
Below, find a selection of current and past policy projects, along with downloads of project outputs and a selection of press coverage.
Current Policy Project
Overview of my current policy project on ESG and sustainable finance. The project has multiple deliverables and consists at both working with and education the financial services industry, policy makers and the academic community. The first output is expected in late 2022.
ESG
ESG and the Future of Sustainable Finance
Year:
Institution:
Audience:
Authors:
Output:
Research:
2023-2024
American University Sharjah
Policy Makers, Asset Managers
Christian Rauch
Policy-/Research Note, Industry Advisory
No
Summary
Very few developments in finance have been equally hyped and scrutinized as ESG-, or ‘impact’-, investing. Over the last couple of years, especially leading up to the current period of mayhem in global economies and capital markets, rebalancing portfolios to induce a heavy shift towards ESG, or ‘green’, assets seemed the be all and end all to success in asset management – particularly when measured in terms of funding inflow. However, very little is known, or generally agreed upon by market participants, when it comes to almost every aspect of ‘sustainable’ investing: What are ESG ‘assets’ truly? How successful have investments into such assets been? How is ‘success’ defined anyway? And, has there been the alleged ‘seismic’ shift in investor sentiment to demand ESG investments from their asset managers? The project aims at finding in-depth answers to these questions and compare them to the current state of 'sustainable' investing/finance. Goal is to understand how - or to which degree - 'ESG-friendly' considerations can be reconciled with a (profit-) value-maximizing approach to finance, and to propose solutions on how to integrate both approaches successfully and in a sustainable manner.
Industry Outreach & Expert Panel
Q1-Q2 2024
Research Note
coming
Q3 2024
Policy Note
coming
Q3 2024
Selection on Prior Policy Work with Downloadable Output
Selection of prior policy work on Venture Capital, Private Equity and Banking with downloadable content
Economic Welfare and 'Neo-Banks'
Year:
Institution:
Audience:
Authors:
Output:
Research:
2017
Grove House Ratings UK
Bank & VC Regulators, Policy Makers
Christian Rauch
Policy Note
No
Summary
This note was written as part of the policy work done at Grove House Ratings, a London-based startup rating agency, to support UK policy makers and bank regulators in obtaining a more detailed insight into so-called 'Neo-Banks' or 'Challenger Banks'. Backdrop was the discussion on whether or not to provide those 'monoline' financial service providers with full banking licenses and allow them a fully sanctioned entry into (retail) financial services markets. While praised from a risk management-perspective, it was deemed was problematic that the 'Neo-Banks' invested customers' deposits into liquid securities, such as money market funds, instead of funding loans. As a result, and unlike in 'classic' High Street-banks, money deposited into 'Neo-Banks' was taken largely out of the economic liquidity pool - an undesirable effect from an economic growth/welfare perspective. The policy note explains the backdrops to this argument and makes the point that 'Neo-Banks' should not be considered in the same vein as 'classic' banks.
'Scale-Up' Report for UK Government
Year:
Institution:
Audience:
Authors:
Output:
Research:
2015-2016
UK Government, Barclays Bank
Policy Makers, VC Industry, Entrepreneurs
Oxford University: T. Hellmann, C. Rauch
Policy Report
Yes
Summary
The project was a collaboration between selected researchers of Oxford and Cambridge University, commissioned by Barclays Bank on behalf of the UK government. The project assessed the state of the UK environment for the financing scale-up companies, that is, high-growth start-up companies. Goal was to identify key recommendations for policy makers, industry leaders and the investment community on how to create a more scale-up friendly ecosystem allowing for higher and faster growth of these companies. While the UK had experienced strong growth in start-up activity in prior years, it faced significant challenges in financing the development of scale-ups. The project identified areas for improvement and provided practical recommendations for directions of change. These recommendations focus on the development of a strong entrepreneurial ecosystem that is able to cultivate early-stage start-ups into high-growth scale-ups. One of the many innovations the project pioneered was the development of a Venture Debt market to complement equity funding, as adapted by Barclays Bank.
The 'Volcker Rule' and European Banking Reforms
Year:
Institution:
Audience:
Authors:
Output:
Research:
2014
SAFE Center, Brookings Institution
Bank Regulators, Policy Makers
Douglas Elliott, Christian Rauch
Policy Note, Press Coverage
No
Summary
The project was a collaboration between the SAFE research center at Goethe University Frankfurt (Germany) and Brookings Institution (Washington, D.C.) to offer policy advice for the proposed structural banking reform in the EU following the global financial crisis of 2007-2009. Particular emphasis was placed on evaluating the considerations of adopting a 'Volcker Rule'-style framework for European banks, as mandated for US banks through the Dodd Frank Act written into law in 2013. In preventing proprietary trading activities for banks, the Rule had potentially major implications for a variety of banking activities, so much so that a breaking up of banks into their separate business units was considered. The goal of this policy project was twofold. First, to understand the "Volcker Rule" and - if implemented - its potential effects on European banks in detail. Second, to explore potential alternatives that might achieve similar goals but be easier to implement and less disruptive to a bank's business.
Bain Capital and Mitt Romney's 2012 Presidential Campain
Year:
Institution:
Audience:
Authors:
Output:
Research:
2012
Goethe University Frankfurt
General Public
Sven Fürth, Christian Rauch
Policy Note, Press Coverage
Yes
Summary
In the midst of his 2012 US Presidential campaign, Mitt Romney argued that the profits Bain Capital had created for its investors during his tenure at the firm were the result of "hundreds of thousands" of jobs the company's private equity investment strategy created, suggesting Bain's returns were intricately linked to welfare creation within the companies the firm invested in. This policy note, based on selected deal examples, demonstrates that Bain Capital used certain financial engineering and restructuring techniques - such as so-called 'dividend recapitalizations' - to create profits. While these techniques created wealth for Bain Capital's investors, they came at the expense of the intrinsic value and financial strength of the companies they were being used in - a contradiction to Romney's statements about Bain's return creation. The study explains these techniques by observing Bain investments and the application of said techniques in detail, and provides Dollar-figures for both Bain's profits as well as the direct value loss to the portfolio companies.