By: Hadar Jabotinsky
In a few words, can you tell us about yourself and how you found your way to the academic world? Why choose this area over all others? Did your personal or professional background lead you to it?
I have always wanted to pursue a PhD. After graduating from the Tel Aviv University Law School and interning for the Tax and Securities Fraud Department at the Tel Aviv District Attorney’s Office, I became Chief Legal Advisor, Secretary to the board of directors and Compliance Officer at Euro-Trade Bank Ltd. The Bank was the smallest in Israel and as such it faced a heavy regulatory burden. This led the bank to restructure as an investment company and return its banking license to the Bank of Israel. Accompanying this process from the legal side raised interesting research questions that I wanted to explore academically. Following the closure of the bank, I joined the European Master’s program in Law and Economics in order to study the question whether competition authorities should intervene in regulated sectors, and specifically in the banking sector. After completing my LL.M I returned to Israel and served as Head of Regulation Section at Leumi Bank and as a Legal Advisor and Compliance Officer at the Israeli branch of HSBC. I left my job at HSBC in order to pursue a Ph.D. in the European Doctorate program in Law and Economics, where I wrote about the structure of financial supervision. My main research question was “The structure of financial supervision: consolidation or fragmentation for financial regulators?” I tackled this question using analytical tools from the Law and Economics genre (especially Game Theory and Network Effects), the institutional design, and competition literature. One of the chapters of my dissertation analyzes the optimal financial regulatory structure from an institutional design perspective in order to determine whether there is a single structure for financial regulators that best facilitates information flow. A version of this chapter was later adjusted to examine the situation in the US (on the federal level) and was published in the Stanford Journal of Law Business and Finance. Currently I am a research fellow at the Cyber Security Center at the Hebrew University Law School. I am also an adjunct professor at Tel Aviv University Law School and at Haifa University Law School, teaching the introductory course to Law and Economics, a course on Regulation, a Securities Law course, an Introduction to Business Law course (for the international program at TAU) and several other courses.
What is the main core of your research? Can you give an example or two?
I am a Law and Economics scholar and my research focuses on financial supervision and regulation. I am currently involved in the development and improvement of models and methods for the study of financial regulation. One of my present areas of research involves regulatory texts (specifically exploring the Basel Accords, which are the global bank risk regulatory standards) using a novel text mining computer program. I am also working on an empirical paper examining how regulatory initiatives become law at the parliament level; a paper offering a behavioral perspective on revolving doors in the financial markets; and a paper examining cryptocurrencies in order to recommend how they should be regulated.
Do you think that in this cyber age these issues are even more complex compared to other times in history? If so – in what ways?
My research on cryptocurrencies is only possible due to the cyber-age.
After explaining the main core of your research, what do you think is the solution? What is the proper model for that? Is it applicable?
As cryptocurrencies gain popularity, the issue of how to regulate them becomes more pressing. The attractiveness of cryptocurrencies is due in part to their decentralized, peer-to-peer construction. This makes them an alternative to national currencies, which are controlled by central banks. Given that these cryptocurrencies are already replacing some of the “regular” national currencies and financial products, the question then arises: Should they be regulated? And if so, how? This paper draws the legal distinction between cryptocurrencies that are actually currency and those that are securities disguised as currency. It further suggests that in cases where a token is indeed a security, regular securities regulation should apply. In all other cases anti-fraud measures should be in place in order to protect investors. Further regulation should only be put in place if the cryptocurrency starts increasing systemic risk in the general financial system.
What is the next phase in your professional life?
I hope to continue research in the field of financial supervision and regulation and to become a tenured professor at one of Israel’s leading research institutions.
What is your message to the public?
“Find a Job You Love and You’ll Never Work a Day in Your Life” (Confucius). Since I started researching and teaching, I’ve come to know from my own experience how true this sentence really is.