Online PhD in Finance

The standard duration of a PhD Finance program is between four to six years, with the earlier years spent completing necessary coursework and developing research ideas for a dissertation, which is written over the course of the final two to three years. Also during the first two years are initial research assignments and activities to prime students for their dissertation work. Once all the preliminary requirements have been fulfilled, students are admitted to candidacy, signifying that they have completed the majority of the requirements of their degree, and are likely to complete all of them. At this stage students will begin working closely with a faculty member, continuing the research they began before candidacy, and refining it into a prospectus, which they will propose to a committee for approval of their dissertation thesis. The rest of the doctorate degree will be spent researching and composing the dissertation until it is ready to be defended by the student to her committee. It is also during this time—usually around the fourth year—that students will prepare for and take their General Examinations, a combination of written and oral exams designed to comprehensively test students’ understanding and retention of studied and researched material. Upon satisfactory performance in General Exams and successful defense of their dissertation, students will be conferred a Doctor of Philosophy in Finance.

About Online PhD Programs in Finance

Online PhD programs in Finance take roughly the same amount of time to complete as conventional programs, but have a few features distinct from campus programs. First, and most apparent, is the nature of the instruction; with the exception of twenty days of residency that can be completed in parts, students interact with the material online, and without direct contact with their professors. Unlike traditional programs, the pace and intensity of instruction in online doctorate programs in Finance is determined by students’ schedules and motivation, allowing them the freedom to research as time permits. Some online Finance PhD programs prove exceptional to this rule in that they operate on a more structured module learning model that demands regular study and research, but the majority of distance learning programs are conducted as independent research projects, resulting in at least six papers, under the remote guidance of a faculty member.

Exactly like campus programs, however, online PhD Finance programs include an extended period for formulation, research, and defense of a dissertation, though there is no General Exam. The dissertation is the final requirement for an online doctorate in Finance, and the degree will be conferred upon a graduating student after it has been approved. In order to facilitate the selection of a dissertation topic, and to direct their research, many online doctoral programs in Finance require that students also choose a concentration within Finance, such as financial management, statement analysis, investment portfolio analysis, international business finance, financial Mathematics, financial econometrics, computational finance, financial engineering, or quantitative finance.

Coursework toward an online doctorate in Finance will reflect the concentration a student chooses. Some of the courses* a student could expect to see in online PhD programs in Finance are (course material taken from University of California Berkeley course catalog):

Year One:

  • Discrete-Time Asset Pricing. Studies the theory of asset pricing, especially under risk and uncertainty, i.e. what factors to consider when investing in an asset, and how to reasonably decide the amount to invest.
  • Economic Theory and Game Theory. Introductory course covering the basic tenants of economic theory, as well as consumer and game theory. Builds a foundation on which the rest of students’ coursework will stand.
  • Econometrics. Basic introduction to probability and statistical theory, as well as the classical linear regression model. Teaches tools that students will continue to use in their studies.

Year Two:

  • Corporate Finance. In this course, students will study the theory behind financial arrangements in corporate financial management, including a number of factors, such as incentive, moral hazard, and principle-agent problems.
  • Information Economics and General Equilibrium. Information Economics and General Equilibrium: Further and more advanced study of economic principles, such as mechanism design, and equilibrium theory.
  • Stochastic Calculus. This course is an in-depth study of the key concepts introduced in continuous-time finance, covering the essentials of stochastic analysis, particularly those most relevant to financial engineering.

Year Three:

  • Macroeconomic Finance. A theoretical and empirical study of the mathematical concepts and current issues in macroeconomic finance, including topics such as the capital asset pricing model, portfolio choice, and risk-sharing.
  • Aggregate Economics, Applied Macroeconomics. A study in econometric and computational techniques, with an emphasis on macroeconomic models; theory and practice of aggregate economics; rational expectations models; finance theory integrated with macro.
  • Probability Theory and Measure Theory. Advanced study of sophisticated probabilistic mathematics and theory, including expectation, distribution, characteristic function methods, and martingales.

Year Four:

  • Empirical Finance. Introduction and guide to issues in empirical asset pricing. Students learn key features of asset-price behavior and study how researchers test various theoretical models from finance and economics, focusing on advantages and disadvantages of research designs. Intuition behind practical econometric tools is developed and applied to asset pricing questions. By critically evaluating research, students determine which characteristics of an empirical paper influence the finance profession.
  • Microstructure. Students learn key features of asset-price behavior and study how researchers test various theoretical models from finance and economics, focusing on advantages and disadvantages of research designs. Intuition behind practical econometric tools is developed and applied to asset-pricing questions. By critically evaluating research, students determine which characteristics of an empirical paper influence the finance profession.
  • Corporate Finance. Study of the financial decisions made by firms and the effect of such decisions on observables. These can include debt/equity ratios, dividend policies, or the cross section of returns. In addition, corporate finance considers conflicts of interest between shareholders and managers and between different financial claimants.

After studying the basic and advanced concepts of finance in micro- and macroeconomic settings, and developing a firm grasp on current issues and problematic areas, students will propose a research topic based on their interests. Once the topic is approved students will work steadily, usually over two years, writing their dissertation. Some student dissertations in finance have been: Essays in Social Status and Finance; Uncertain Growth Cycles, Corporate Investment, and Dynamic Hedging; Agency Costs, Executive Compensation, and Firm’s choice of Payout and Financing Policies; Debt Financing and Real Options; and many, many more.

Value and Criticisms of a PhD in Finance

Especially among undergraduates, there is a misinformed belief that a PhD is a kind of magical degree that grants priority and importance to anyone who holds one. The (rather un-magical) truth is that a PhD does not transform graduates into universally employable übermenschen; and in fact, most students with PhD’s remain in academia as professors or researchers, and never enter the typically construed “job market.”

Given this truth, consider the PhD in Finance, or the online PhD in Finance: upon graduation, it is unlikely that a student will rocket to the top of any corporate ladder, become CEO overnight, or receive abundant offers for lead partnership in financial consulting firms. This is not meant to naysay the Finance degree, but rather to demystify the PhD. A PhD in Finance—or an online Finance PhD—has great value insofar as it can be applied toward a career in teaching. The intense breadth and depth of research and instruction in mathematical financial theory, continuous-time finance, econometrics, and a host of other topics more than adequately prepares students to teach finance to undergraduates or continue contributing important research to the field.

In the job market, however (or perhaps “on the battlefield,” as it were) the PhD may not be as robust, as many of the skills needed more management are not taught at the PhD level, and many firms look for applicants with harder science degrees, such as math or physics. Remember that PhD programs, even online doctoral programs in Finance, are principally research programs designed to hone students analytical and educational skills, not necessarily to prepare them for the high-stakes, fast-paced world of finance (although there are some online doctorate programs in Finance that take a more practical approach). Understanding financial decision-making theory is one thing, but practicing it is quite another and employers will take that into account when reviewing applicants’ histories. Most master’s programs require an internship or professional experience, so if working operationally in the field, as distinct from theoretically in academia, is a student’s ultimate goal, she may consider concluding her education with a master’s in finance, and transition into the professional world to gain experience.

Online degrees are gaining popularity and credibility more and more as technology continues to shape and define our culture. This does not mean, however, that all online degree-granting institutions are created equal, or that an online degree, even something normally so distinguishing as a doctorate degree, is valuated fairly against a more conventional degree by employers. The most salient, applicable advice is to use discretion when choosing programs. An initial criterion when investigating schools is whether they are accredited or not: the top, best online programs will be accredited—and this holds true for online doctorate programs in Finance. As finance does require mathematical savvy and intuition, and the educational format of this information does not necessarily determine a student’s aptness for it or success in it, online doctoral degrees in Finance may prove to be a convenient and efficacious way for working students to augment their education. Furthermore, because PhD work is largely self-directed anyway, it might impress potential employers that a student fulfilled the requirements of a PhD entirely without supervision, and did so responsibly and with dedication. It demonstrates a commendable level of drive and focus, both of which are certainly attributes employers seek out. Additionally, completing a Finance PhD online may be advantageous to students inasmuch as many programs require a working knowledge of a computer programming language.

Application & Admission Requirements

An extensive background in quantitative analysis methodology, mathematical modeling processes, econometrics, statistics, as well as in algebra, basic calculus, and matrix and probability theory is required for most online PhD degrees in Finance—if an online doctorate in Finance does not require this kind of educational grounding, a student should be cautious in proceeding. A master’s degree is also required for an online PhD in Finance, though the master’s need not be in Finance; many successful business, management, economics, psychology, and even computer science majors have obtained PhD’s in Finance. Another requisite skill for most programs is fluency in a computer programming language, namely FORTRAN, C, Matlab, or GAUSS.

The admission requirements for Finance PhD programs online are typically the same as the onsite PhD programs. For many schools, the only difference in online and onsite programs is the delivery of information. Before applying to a PhD program, applicants need to have a minimum of a master’s degree from an accredited institution. In addition, colleges will want applicants to have current licenses and certificates in their specific area of work and study, as well as two years or more of relative work experience. Because of the intensity of online doctoral degrees in Finance, and because the subject material studied in Finance doctorate degrees online is best absorbed by students with prior practical interaction, some schools may require or prefer students to wait at least two years after their most recent formal graduate work before applying. During these two years before application to an online Finance doctorate program in Finance, students should try to gain relevant work experience in Finance. Generally application to online Finance PhD’s will also include transcripts, letters of recommendation (three is standard), GRE or GMAT test scores, and a personal statement or statement of purpose, sometimes in conjunction with an additional sample of academic writing. Exact application procedures will vary from school to school; students need to fully research all application materials when applying to any program.

Career Options & Job Market

The majority of PhD graduates go into postdoctoral research or teaching positions at a university; roughly 72 percent of Finance PhD’s follow this path . Competition for faculty or tenured positions can be extremely aggressive, especially in the current economic climate, as education across the country is suffering from budget cuts and faculty downsizing. However, research is a source of funding for many schools, and could be a lucrative enterprise for dedicated students.

Again, the job market for Finance PhD’s is strange: having a PhD does not preclude students from getting jobs as Financial Advisors, Analysts, Quantitative Risk Analysts, or any of the other dozens of finance careers available, but employers might be hesitant to hire a PhD because of the extra years the applicant would have spent on her education. With the added value of more education, the applicant could ask for more than the employer was willing or able to provide, increasing the chance that the employer would choose a less-educated applicant over the PhD—time truly is money. Those positions exist, though, and are offered to PhD graduates the same as they are offered to anyone else. If a PhD student does wish to seek employment in the business sector, a few common starting positions are Operations Research, Management, and Investment Analysts.

Where to Find Information

  • American Finance Association The American Finance Association is an academic organization that furthers economic knowledge, both in study and by advocating the economic sciences. The Association also publishes a prestigious economic journal titled The Journal of Finance.
  • Bureau of Labor Statistics The Bureau of Labor Statistics provides detailed accounts of job responsibilities, salaries, projected growth of a position, and numerous other pieces of information that should help students get a glimpse of what certain positions in the financial field look like.
  • Soceity of Financial Service Professionals The Society of Financial Service Professionals is an organization of financial experts, academic and professional, that provides tools, resources, and network opportunities to professionals around the world for the sake of the growth of the industry.
  • The Economist The Economist is a weekly magazine (though it calls itself a newspaper) that covers a huge variety of economic news from around the globe. With regular reading, interested students can quickly and efficiently stay current on all important events in the economic field.

How to Get Funding

Generally there are two types of funding available to students pursuing an online PhD Finance degree: scholarships and grants. Scholarships are usually need- or merit-based, and can be highly competitive. Grants can take a number of forms depending on the source of the funds—the two most common are government grants, given to students with demonstrated financial need and outstanding educational history, and research grants, awarded after a proposal has been submitted to a government department, a corporation, a business, or sometimes an individual, promising to research a submitted topic and return with data and conclusions about it.

Tuition costs for one semester or quarter vary from school to school, but to give a preliminary picture of what total expenses for an online Finance PhD will be, here are the tuition prices of two online universities: 1) Capella University — $4,566 per quarter, with a limit of three courses per quarter (except dissertation quarters, which are $4,062), and 2) Northcentral University — $2,200 per course. That puts total cost for Capella University somewhere between $43,644 and $51,768, and around $22,000 for Northcentral University.

The following websites will be instrumental in a search for funds for an online Finance PhD:

  • Capella Scholarships. Capella University sponsors several scholarships for its students, based on qualifications such as academic excellence, leadership, and demonstrated success in enrolled fields. These scholarships are typical of scholarships in general; there are many more to be found online and through other resources.
  • National Science Foundation. The National Science Foundation is a federal agency that, with a nearly $7 billion annual budget, provides funding for 20 percent of all federally funded research in U.S. colleges and universities.
  • FAFSA. The Federal government disperses billions of dollars into the education system every year to fund students seeking secondary and post-secondary education. They offer scholarships, grants, and loans to any eligible student that fills out the Free Application for Federal Student Aid (FAFSA).

Essential Advice

  • Consider which sector—business or academic—you truly want to work in. Remember that most PhD Finance graduates do not work in the business sector, but as researchers or teachers in academic institutions. If, however, you are determined to work in the business sector, and also determined to obtain a doctoral degree, plan accordingly: understand that you may have to settle for an entry level job at first, or at least be prepared to make an excellent case for yourself in an interview. Your competition will have several years of experience already, and a more practically oriented degree, so account for that.
  • Learn a programming language. Even if you don’t enroll in a Finance PhD online program, knowing at least one programming language, if not several, will be an invaluable skill, and a necessary one in the finance world. A few common languages used in finance have been listed above (FORTRAN, C, Matlab, GAUSS); research the languages and begin to immerse yourself in them. If you do, when you apply for jobs in the finance market, you will be able to compete effectively, and hit the ground running when you are hired.