“With so many zeros, it's hard to make the link with the real world"

Finance wasn’t initially Fuster’s cup of tea, but that all changed in 2007 with the start of the subprime crisis – a financial crisis that began with overindebted consumers in the US and then spread around the world. “This was a major global shock and it marked a turning point in my career, as if someone flipped a switch and I suddenly realized what I wanted to do,” he says.

Now an associate professor of finance at EPFL’s College of Management of Technology, Fuster earned his Master’s degree from Oxford and his PhD from Harvard, both in economics. He spent ten years working at central banks – first the US Federal Reserve and then the Swiss National Bank – before taking the EPFL position in 2021. “Even though my career path hadn’t been oriented towards teaching, I felt it was time to share my on-the-ground experience with students.”

But not just any students – Fuster decided to take the challenge one step further and teach finance at a technology school. “I think it’s essential for people in technical fields to have a solid background in finance,” he explains. “And since some of my research has to do with technological advancement, it’s a very good fit.”

Spicing up the topic

Fuster admits that teaching finance isn’t always a walk in the park. “It’s a ponderous and sometimes impenetrable subject,” he says. “What’s more, most finance textbooks were written in the US and describe a financial system that’s fundamentally different from ours. That doesn’t help.” Another challenge relates to the “astronomical figures that we deal with in my classes. With so many zeros, I can understand why students may have trouble making the link with the real world. But actually, when you get down to it, those astronomical figures affect all of us.”

To avoid losing half the classroom during his lectures, Fuster employs a highly pragmatic approach. “I’m a firm believer in using actual, concrete applications when testing the theory,” he says. This includes having students work on problems inspired by current events. For instance, he has asked students to evaluate a possible merger between two large European banks. “I also bring in guest speakers from the finance industry to provide insight on the topics we study in class,” says Fuster. “Speakers have included the head of risk management at a cantonal bank, an advisor at the Swiss National Bank and the cofounder of a fintech startup.”

Another important element of Fuster’s teaching is to draw on the latest research. “Whenever possible, I try to base my lectures on studies that are less than five years old,” he says. “That means I stray from what the authors of most ‘classical’ textbooks do, which is to quote from seminal research done over 20 years ago.” Fuster, a specialist in behavioral economics, finds that “it’s particularly gratifying to teach concepts that are being studied and debated by the leading academic figures in your field.”

A fictional bank run

Fuster also gets his students to roll up their sleeves and conduct their own experiments. “I’ve had the students play an economic role-playing game,” he says. The game consisted of simulating a bank run. “There were two possible scenarios in the game. In the first, all of the bank’s depositors withdraw their funds, which makes the most sense on an individual level but isn’t the best outcome collectively. In the second, none of the bank’s depositors withdraw their funds, which might also make sense on an individual level but only if each depositor believes all the others will behave in the same way.” In playing the game, “the students naturally become much more familiar with a concept than if they read a research paper on it,” Fuster explains. He believes this interactive approach to teaching is probably what tipped the scales in his favor for the best teacher award. “Students also like the fact that I always leave enough time for questions – and answers.”