When School of Management (SOM) student Raul Martinez Ostos was working on his undergraduate thesis at the Instituto Technologico Autonomo de Mexico (ITAM), his friends chided him for delving too deeply into his research and giving up most of his social life. Over and over again, Martinez Ostos heard variations of: "Get a life! Your thesis is just something you have to do to fulfill a requirement; it doesn't have to win a prize!"
More than a year later, when Martinez Ostos completed his 240-page thesis on the topic "Banking Crisis, Rational Bubbles and Financial Regulation: Lessons from the Case of Mexico," many of these same friends told him that the work would never win any awards because it was too long.
His recollection of his friends' skepticism made his joy all the sweeter when Martinez Ostos recently was selected winner of the 1997 Banamex Prize for the best undergraduate thesis, which is presented annually by Banamex, Mexico's largest bank.
The news that he won the prestigious prize came while he was home in Mexico City during Thanksgiving break. Several weeks later, while in the middle of exams at SOM, Martinez Ostos flew back to Mexico for the award ceremony. Guillermo Ortiz, Mexico's then-minister of finance who recently became governor of Banco de Mexico (Central Bank), presented him with the prize, which carries a cash award of approximately $10,000.
"In Mexico, this is an award that is very, very important and so it is a great honor for me," says Martinez Ostos. "Many of Mexico's famous economists received the award early in their careers. I will never forget the look in my parents eyes when they heard that I won. That alone made it worth all the effort and time I committed to writing my thesis."
When he set out to write his thesis, Martinez Ostos knew that he wanted to do research that would have some impact in the field of economics. "I decided that if I'm going to do this, I'm going to do it well. I wanted to do something that I could look back on in 20 years and say it was important in its moment," says the Yale student.
Before beginning the project, he had already been accepted to Yale, where he is now in the joint I.D.E. (International and Development Economics)/M.P.P.M. (Master's in Public and Private Management) program. He deferred matriculation to allow himself ample time to work on the thesis, which ITAM students are allowed up to three years to complete. "The undergraduate thesis in Mexico is more like doing a Ph.D. thesis in the United States but on a smaller scale," he explains.
He chose his topic after completing his courses at ITAM in December 1994, just as a banking crisis was beginning in Mexico. Since his undergraduate days, he had been working in the economic research department at Central Bank, so the nation's banking crisis was not only a timely topic, but also one of personal interest, he says.
His thesis analyzes the similarities in the economies of other nations that also experienced banking crises -- such as Chile, Argentina, Uruguay, Norway, the Philippines and Thailand -- and compares how these nations handled them. It also explores how similar circumstances and reactions led to Mexico's banking crisis, and contains recommendations on how to avoid such crises in the future.
"I had noticed that most banking crises followed a period of current account deficits, an economic boom, a period of low inflation on the heels of a period of high inflation, and financial liberalization," Martinez Ostos explains. "Another similarity is that the combination of these factors makes consumers, foreign investors and institutions start having raised expectations. All of that optimism -- that euphoria -- about the economy is like a bubble forming. My thesis focuses on the euphoria in the banking system in Mexico that came after the privatization of banks there, and looks at the Mexican experience leading up to that feeling of euphoria."
His thesis is the first published literature describing this euphoria-driven economy in Mexico, according to Martinez Ostos, who used complicated mathematical equations to prove his theories about the country's crisis.
A semi-professional baseball player during his high school years, Martinez Ostos says he chose to pursue the study of economics rather than a sports career because it seemed more practical. "Studying and baseball were my two passions, but life in the pros is so uncertain," he explains. He decided to come to Yale because it offered the most flexibility in its programs, says the SOM student.
"I've wanted to get a Ph.D. in economics but really don't want to get focused solely on the academic part," comments Martinez Ostos, noting that at Yale, he has had the opportunity to enroll in a number of Ph.D.-level courses while working toward his master's degree. "I've also wanted to get some of the practice and business skills that SOM provides, to learn how banks and firms think or learn what's behind a certain entrepreneur. The I.D.E./M.P.P.M. program was the perfect combination for me because it allows me to do both."
Martinez Ostos began his studies at Yale in the fall of 1996 and completed his master's degree in international and developmental economics at the Graduate School last year. In December, he expects to earn a M.P.P.M. degree at SOM, where he is studying as a Fulbright-Garcia Robles and Ford-Hewlett-MacArthur scholar.
Coming to Yale, particularly SOM, has been somewhat of a culture shock for the Mexican student, he says. "ITAM, which is rated the number-one school in Mexico, is fiercely competitive, and many of its professors there are leaders in government or industry with time constraints that don't allow them to be very accessible," explains Martinez Ostos. "At SOM, I've been amazed at how friendly and collegial the environment is. There have been professors who have responded to e-mail I sent them within six minutes after I forwarded it," he says. "And there's a real bonding that takes place between students that is very refreshing to me."
Martinez Ostos is one of five SOM students selected by Yale's Investment Office to intern this summer at one of the firms that helps manage the University's more than
$6 billion endowment. He will work in the Latin America department of the Greenwich, Connecticut firm Farallon Management. The knowledge and experience he gains at Yale and during his internship will help him when he begins a career in international or corporate finance in Mexico.
When the SOM student was presented with the Banamex Prize, a top banking official at the ceremony noted that "economists have a social responsibility to transmit their economic knowledge to the population." Martinez Ostos says he shares that belief. "My purpose in studying corporate and in-ternational finance has always been to do work that would be of benefit to my country."
--By Susan Gonzalez