Ask any seasoned finance professor about how to generate research ideas, and one piece of advice you'll often hear is "read the news." But it's never quite that simple. In this post, I provide a systematic approach that can help turn the inspiration from current events into a publishable research.
The fundamental challenge in converting news into research lies in the different goals of these two domains.
This translation — from "interesting event" to "scholarly contribution" — is what makes generating research from news both challenging and rewarding. We need to connect market events to existing academic literature, develop testable hypotheses, and ultimately advance our theoretical frameworks.
Here’s a useful mental checklist to run through every time something happens in financial markets and if you think there’s a “paper” to be written. Note that 90% of the time, the idea dies at some point in this process. That's okay – better to kill an idea early than after months of work.
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💡 Write down everything systematically, focusing on these five things:
The key here isn't completeness – it's clarity. Sometimes the role of certain players might be unclear, and that's fine. In fact, that might be interesting in itself.
Here’s a critical test to see if your event fits into one of the canonical patterns in empirical finance research. If not, it is likely to be a dead end.