Who can afford to fund research about the future when markets are falling apart in the present? Bank of America Corp., apparently, and Massachusetts Institute of Technology professor Andrew Lo is a beneficiary. As director of the Laboratory of Financial Engineering at MIT’s Sloan School of Management, Lo, 48, is sharing a five-year, $22 million BofA grant with the Center for Future Banking at MIT’s Media Lab. BofA is supporting research on technological and quantitative themes, such as data mining and behavioral economics, that it hopes could produce “next-generation analytical models” to help bankers better understand markets and serve clients, says Abhishek Mehta, a BofA strategic adviser working on the project. Given the industry’s current struggle to value hundreds of billions of dollars worth of exotic securities and derivatives, the timing couldn’t be better.
