Endowed Professor of Business & Economic Development, Professor of Finance & Business Economics, University of Washington

Educational Background

Ph.D. Finance and Economics from Ohio State University, 1971
MBA  Finance and Economics from Ohio State University, 1968
B.A.   Economics from Howard University, 1967

Research Areas

Venture Capital, Entrepreneurial Finance, Corporate Finance and Banking.

Keeping up with Developments in Finance

As Special-Term Professor of Finance at Shanghai Advanced Institute of Finance, Professor William D. Bradford holds an endowed faculty position at Foster School of Business, University of Washington, serving as Endowed Professor of Business and Economic Development, Professor of Finance and Business Economics, and Faculty Director of Business and Economic Development Center. Apart from teaching in the top business schools, he has also served on the Board of Directors of Commerce Bank and other companies, and provided business consulting services to numerous companies for over thirty years. In this interview, Professor Bradford shares his insights on successful business and a keen research interest related to China’s economic development.

“Industry experience has tremendous impact on academic research.”

Professor Bradford believes that industry experience has tremendous impact on his academic research. “One of the challenges for finance professors is trying to keep up with the developments in finance as businesses see it”, he says. Therefore, being a consultant or being on a firm’s board of directors is a great external access to business for him to understand what the current business issues are. Based upon his experience on the boards of directors in the United States, Professor Bradford found it interesting to understand how banks in China develop their strategies. It also inspired him to undertake research on Chinese firms, such as “corporate finance issues in China, the dividend policy in Chinese firms, and the effects of certain types of accounting on financial decisions of Chinese firms”, according to Professor Bradford.

Meanwhile, academic research helps him to recognize how good financial decisions are made. Professor Bradford elaborates the three aspects of the key to successful business in China as following:

First, “how well the business plans for achieving growth”, in other words, “how effectively does the firm obtain and organize the human and financial resources to achieve the business outcomes they want to achieve. Business planning is crucial in achieving superior business performance.”

Second, “constantly evaluating performance in the major parts of the firm” becomes essential when the business environment is changing constantly. He suggests that executives continually ask “are we achieving maximum performance?” Externally, what are others doing? What are best practices? Internally, are we optimally using our resources? What can we do better?

Third, making certain that the firm is sufficiently “protecting itself from bad surprises”. That is, suppose some natural disaster, unexpected government decisions, unexpected changes in the industry or the general economy happen, whether a company “has enough resources to withstand these changes and keep going on.”

Professor Bradford is now interested in small and medium-sized enterprises in China, and research topics on entrepreneurial finance. He started to pursue this research interest when he was at SAIF on sabbatical in 2010. He cites data that “small and medium-sized enterprises produce approximately 65 percent of China’s GDP.” As he explains, though contributing a large amount of GDP, they get less than forty percent of the total bank loans in China. “One of the key issues is making certain that banks are able to provide sufficient financing for the further growth of small and medium-sized businesses in China”, he suggests, “once banks realize how to do this, there will be a positive jump in China’s economic development and GDP”.

“The Federal Reserve’s actions have positive impact on consistent growth.”

There has been much discussion about a third round of quantitative easing recently. Weeks ago, the Fed announced its third round of quantitative easing, with open-ended purchases of $40 billion of mortgage debt a month. When it comes to the prospects of QE3, Professor Bradford says “eventually it is going to be good for the U.S. economy and the world economy including China”. As for the timing of this process, it is based upon a number of issues in the United States, he adds.

In the past, he continues, the two political parties in the U.S. were more willing to compromise and move the economy along. These days, the parties do not compromise, there is a stalemate and nothing is done. “The Federal Reserve’s actions may have a positive impact, but the actions of the U.S. Congress affecting fiscal policy will have a negative impact. The exact path of expansion over the next three years is uncertain”, says Professor Bradford. On the other hand, he believes that the Federal Reserve’s actions will eventually have a positive impact on economic growth in the U.S.

“The best thing economy can do is to provide them with the resources to implement their ideas.”

The wealth management of black and white families is a topic Professor Bradford examined closely in his research papers. There were two key questions he was hoping to answer: “why do black entrepreneurs hold a lower fraction of black family wealth than white entrepreneurs hold of white family wealth; and why do black entrepreneurs have a higher rate of failure than white entrepreneurs”, says Professor Bradford.

“The median family wealth of white families is six times the median family wealth of black families in the United States”, he explains, “there have been some improvements in that figure, but still there is a great disparity”. Therefore, questions such as “what are some ways that the disparity can be reduced so that the wealth distribution can be more evenly distributed between black and white families?” stimulate him to explore the research. Later, his research focuses on entrepreneurship, because entrepreneurship among black families increases the median family wealth of black families and reduces the disparity between black and white families. However, he found that there is a higher failure rate amongst black entrepreneurs, and black entrepreneurs hold a lower fraction of black family wealth than white entrepreneurs hold of white family wealth.

“Individuals should be able to self-actualize”, he continues, “If the society is good, it should allow individuals to fulfill their abilities. The best thing the economy can do is to provide them with the resources to implement their ideas. If there are useless restrictions that do not allow black or white entrepreneurs to get into business in the first place, then the society loses.”

“There are some characteristics in our economy that result in higher failure rates of black business, but that is not because black entrepreneurs are less talented”, Professor Bradford adds, “so we should seek the reasons to eliminate barriers so that both entrepreneurs gain and the economy gains.”

According to Professor Bradford, research studies show that there is discrimination in lending, so that black entrepreneurs have a higher likelihood to be rejected even if they have the same traits as white entrepreneurs whose loan applications were accepted. Considering the research results like these, many banks in the United States are now looking at how they make lending decisions to small businesses in order to understand and eliminate discriminatory practices. Bank regulators have been concerned with this issue and actively discourage discrimination in lending.

At the same time, Professor Bradford is excited about research he is conducting on businesses in China. One research focuses on “publicly traded companies in China and the dividend policy of Chinese firms”. To be specific, “how do they make dividend policy, how does dividend policy differ between state-owned firms and non-state-owned firms, is why does it differ,” he says. By developing theories, research and empirical tests, he examines the dividend policy of Chinese firms.

Professor Bradford is also undertaking research on small businesses in China. He is hoping to answer a series of questions, such as “do family owned firms perform better? How many of them are there? Are they important to Chinese small business sector?” Around the world, many major companies are also family owned companies. In China, many of the state-owned companies have become privatized. Nowadays, there is a growing number of publicly traded family owned companies. Under the circumstances, he also looks closely at the characteristics of family owned companies in China as well as their management style.

“Joining SAIF is an exciting opportunity and lecturing at SAIF has been a great experience.”

From Professor Bradford’s perspective, the main difference between finance education in China and that in western business schools is the requirements for MBA program. Entrants into U.S. MBA programs typically have 5 years of full-time work experience, while in most MBA programs in China MBA students average much less full-time work experience. He believes that although the university system, particular in business is not as developed in China as in the United States, it is becoming closer.

Take business growth for example. To support the growth, a company needs both human resources and financial resources. The appropriate human resources will be core to achieving successful business outcomes. “This is also why being at SAIF is valuable”, he says, “SAIF is educating and creating a superior workforce in finance to help businesses make good financial decisions”.

As Professor Bradford recalls, he visited Shanghai in 1999 for the first time. This ever-evolving city has changed very much over the years. Joining SAIF is an exciting opportunity, and lecturing at SAIF has been a great experience. The government has specified Shanghai as a future financial center. In this scenario, a major task for SAIF is to create highly qualified financial candidates. He believes that SAIF is doing a great job in training financial professionals, and moving in the right direction. “SAIF is going to be an important institute in financial education in Shanghai, China and the world, and it is an honor to participate in this new undertaking”, he says.