The new Professor of Finance Timothy King: Climate risks challenge businesses and markets to improve practices – and will affect every industry

Timothy (Tim) King initially found about the job opportunity at the University of Vaasa through a former colleague who now works at InnoLab. He learned more about the university through him and a couple of other research partners he knew in Vaasa and Lappeenranta.  

– I knew that the research is of high quality here and that you have a strong cluster of researchers in my exact area of expertise, particularly in corporate finance, banking and corporate governance – which are my main areas of research. So, I saw potential synergies here.  

A job in a university with a remote location up north didn’t bother Tim at all. 

– Moving to a different country and environment appealed to my sense of adventure. I had never previously lived in another country – if you don’t count Wales. However, I have always enjoyed travelling and exposing myself to new cultures and experiences. You get different perspectives visiting other places.  

According to Tim, he had no prior experience of Finland or Vaasa. He visited here briefly last January, in the middle of the coldest and snowiest winter on record and it gave some sort of expectations of how it might be later in the year. He gained his PhD from Bangor University in Bangor, North Wales, and says it reminds him of Vaasa in many ways – a small, scenic and student-focused city on the coast with approximately 65 000 people.   

– I come from quite a small village outside Cambridge in England, so I naturally feel more comfortable in smaller towns and cities, especially close to nature and the countryside, than I do in, say, central London, where you cannot really travel anywhere without encountering thousands of people on a daily basis.

Banks in financial distress

Previously, King worked as a senior lecturer in finance, banking and innovation at the University of Kent and was the director of the Centre for Quantitative Finance there. Before this, he taught corporate finance and commercial banking at Leeds University Business School. 

At Bangor University, he obtained his PhD in which he examined the efficacy of corporate governance in banks and non-banks. So far, his research has focused on related themes, and his interests cover corporate governance, corporate social responsibility (CSR), senior managers, executives and boards of directors and financial technology – all of these in both non-banks and banks. 

– Right now, I have a diverse range of research projects that I could put into two main streams. One relates to corporate finance and corporate governance and the other to banking. 

Most recently, he has been finalizing a paper that looks at whether the ESG (environmental, social and corporate governance) is a relevant factor in predicting bank financial distress. 

– There are traditional factors, like profitability or long-forming loans, that can indicate whether the bank is about to fail soon. And then, we essentially add environmental, social and governmental factors to these prediction models to try to see whether they have some predictive capability in addition to the traditional factors. We estimate this with a wide range of techniques used by banking supervisors, with things like logistical models as well as machine learning techniques. So basically, we try to show whether these are relevant factors for the prediction of bank financial distress.

Businesses and markets driven by sustainability

One of Tim’s research goals is to gather and enable academic knowledge in the field of corporate governance and sustainable banking. This includes research into the impact of climate scenarios on the financial sector and the economy. 

– We are currently going through a period where the climate risk or “the climate action failure” is – according to the World Economic Forum – the biggest long-term threat to humanity and the planet. It is the factor that is likely to be the major area of impact for institutions over the next decade. My future research is designed to focus on this area. 

He has an interesting project with the University of Birkbeck, where they look at a new piece of legislation that makes it mandatory for large firms to report their non-financial information on climate-related risk and opportunities. The United Kingdom is the first of the G20 countries to make this guideline mandatory. 

– We are looking at the impact that this mandatory reporting disclosure will have on different firms and their supply chain.  

– This could have quite a significant impact beyond academia because we are investigating what happens in one country after a new piece of legislation versus countries where it is purely up to individual institutions to comply with that recommendation.  

Improving accountability for how companies operate and how they potentially damage the environment through emissions and other activities is important for achieving the goal of zero emissions and of course – more broadly – to save the planet.  

– That is important to address, you know, the behavior of individual firms. It is the only way to cut emissions globally.  

Climate risks and climate actions affect every sector of the economy. Even cryptocurrencies. 

– Just recently, a theory was put forward about Ethereum, another major cryptocurrency, which is in the process of replacing its consensus algorithm with a more climate-friendly algorithm that would reduce electricity use by about 99%. I do not want to comment on the future of cryptocurrencies, especially in the current climate, but I see this as an important step too. 
 
According to Tim, there are still plenty of global issues besides climate risks that will affect markets now and in the near future: the war in Ukraine, inflation, and the energy crisis.  

– It is hard to make any long-term implications. Generally, we have a pre-movement toward more nationalism in countries and trade has become more distorted, so this could affect trade imbalances and transmission risks between different countries.

The power of mentoring others

In addition to his current post at the University of Vaasa, Tim works as an external examiner for undergraduate and postgraduate programmes for two different universities in Scotland: the University of Glasgow and the Heriot-Watt University in Edinburgh.  

The external examiner plays an important role in all degree-level examinations in higher education in the United Kingdom.  

– All universities need to have external examiners who evaluate the curriculum of programmes and recommend possible changes. They also review degrees and the university's awarding powers to ensure that the grades awarded are appropriate for students. 

Once a year, Tim is also involved in helping organize a symposium specifically designed around PhD students, which is typically held in various universities across Europe. That is to give them a comfortable place to get expert feedback from academics across the world and to mentor them in their career. 

– I first attended this as a PhD student, and was lucky enough to win the best paper award there, so I can see the first-hand benefits of being in this network. I have always been involved in helping and mentoring others, and that is my favorite part of academic life. 

A curious mind led to becoming a researcher

Professor King has no direct answer to how he ended up in academia and as a researcher. 

– I am naturally curious and at school, I was particularly interested in business and economics. From this sort of early interest, I have fallen into university. First, more general studies like finance and then more specific studies in banking and finance.  

Bangor University is among the top universities in banking research. According to Tim, he had some influential teachers and researchers who guided him and captured his interest to think of banking as a discipline.  

– I was motivated to understand how economies work and how businesses function within economies, why individuals and institutions make the decisions they make and why. For instance, CEOs make specific strategical choices within a firm, and I wanted to understand the drivers behind their decisions, and, in the end, the consequences for the firm and society. This continues to drive my research.

Facts 

• Name: Timothy King
• Born: 1985, grew up just outside Cambridge 
• Education: PhD, Banking and Finance, Bangor University (UK) 
• Career: University of Leeds (UK): 2013-2018; University of Kent (UK) 2018-2022 (Director of the Centre for
• Quantitative Finance (2020-2022); Research and Innovation Committee (2020-2022); Department Research and Innovation Lead (2021-2022); Chair of the Academic Disciplinary Committee (2018-2022) 
• Hobbies: Music, playing the guitar, jogging, hiking, a huge football fan (supporter of Norwich City F.C.) 
• Surprising fact: “I am still quite young, so I have moved through my career quite quickly in different universities. I was given a lot of responsibility already at my first university where I was in charge of managing £350 000 worth of databases in my department. Also, I had a key role as a director in one of the three research centers at the University of Kent and as a Chairman of the Academic Disciplinary Committee.”