College of Business and Economics

UW-Whitewater alum to speak with E.U. regulators on research into anti-money laundering directives

March 29, 2021

Written by Dana Krems | Photos by Craig Schreiner

In the coming weeks, Henry Balani, DBA, is speaking with European Union regulators about his most recently published article, The Impact of the Fourth Anti-Money Laundering Directive on the Valuation of EU Banks. The research provides important insights for regulators, financial institutions and investors and shows the impact anti-money laundering regulations can have on banks’ stock price and risk.

Balani completed his Doctorate of Business Administration in finance at UW-Whitewater in 2017 after successfully defending his doctoral dissertation. Working with Arjan Premti and Mohammad Jafarinejad, finance faculty in the College of Business and Economics, he co-authored and published his findings in Research in International Business and Finance, a highly regarded academic journal.

“The criminal activity of cleaning illicit funds through the banking system is an ongoing global concern,” Balani said. “The Fourth AML Directive required banks to increase their due diligence and reporting of suspicious transactions in an effort to deter these activities.”

Regulations are often a point of contention between regulators and financial institutions, however.

“Regulators need to ensure policies are effective in reducing criminal activity, but banks instinctively protest that compliance is too costly,” said Balani. “When I was developing my dissertation topic, there was a lack of research on the financial impacts of AML regulations on banks.”


Henry Balani, right, in a discussion with Professor of Management Praveen Parboteeah, who established the DBA program at UW-Whitewater.


Premti and Jafarinejad provided their expertise as members of Balani’s dissertation committee. Premti had co-authored research on the regulatory impacts on bank valuations and risk in the United States, establishing a framework for measuring valuation effects. Jafarinejad’s research background included governance of U.S. banks and behavioral finance.

Balani’s knowledge of anti-money laundering efforts, drawn from his 25-year career in the financial technology sector, was crucial to the dissertation.

His hypotheses included the potential for regulations to benefit banks through higher stock valuations and reduced risk profiles. He assessed the effect that the Fourth AML Directive had on banks by measuring bank returns and the shift in bank risk at eight milestones.

“We were able to demonstrate that the Fourth AML Directive benefited banks by providing clarity, encouraging standardization and streamlining the identification and reporting of potential money laundering,” Balani said.

“Banking is based on trust and transparency,” added Premti. “Regulations can provide a more efficient framework for catching and reporting money laundering activities. This results in greater transparency and less risk for banks — which ultimately could benefit investors.”

The research also identified the conditions under which the AML Directive was most beneficial.

“Overall, the data showed that bank valuations increased while risk decreased,” said Jafarinejad. “It also identified specific bank characteristics, like size and types of revenue streams, and country characteristics, such as affluence and perception of corruption, that affected the results.”

Since Balani completed his dissertation, the E.U. progressed to the Fifth AML Directive and is now adopting the sixth. Balani feels the findings can be extrapolated to the recent directives.

“We used publicly available data to measure the impacts and focused on significant announcements or events in the Fourth AML Directive’s timeline,” Balani said. “Other researchers could use the same framework, re-running the analysis with more current data.”

The applied nature of the practitioner-oriented UW-Whitewater Doctorate of Business Administration program was instrumental in making the AML research project possible.


Henry Balani, seated at right with a green binder in front of him, was a member of the first cohort of UW-Whitewater’s DBA program.


"The DBA program connects people with diverse expertise in research and practice, creating unique research opportunities,” said Premti. “This was not a topic where we could simply build on prior research.”

“We helped Henry with the research structure and his crafting his dissertation into an academic paper, but it worked because of Henry’s experience in AML,” Jafarinejad said. “There was very little academic-level research on this subject, so the traditional research framework couldn’t apply.”

The UW-Whitewater Doctorate of Business Administration program is currently recruiting its eighth cohort of students, who will start in fall 2021. In the program, students are taught to use a theoretical lens when framing their area of study and employ academic-level research and analysis to solve real-world problems. The program showcases a strong collection of theses and dissertation defenses, as well as quality academic articles and contributions to practice.