Five Questions With: Michael D. Ice

Michael D. Ice is a professor of finance at the University of Rhode Island. / COURTESY JOE GIBLIN
Michael D. Ice is a professor of finance at the University of Rhode Island. / COURTESY JOE GIBLIN

Michael D. Ice is a professor of finance at the University of Rhode Island. He talks with Providence Business News about the United Kingdom’s vote to exit the European Union, a move popularly referred to as “Brexit,” and what impact it will have on the marketplace. Prior to joining URI, Ice spent 30 years working on Wall Street and has worked and lived in England.
PBN: Brexit had an immediate impact on the U.S. market, as the Dow tumbled for two straight trading days before bouncing back. But what type of long-term effect should investors expect from this move?
ICE:
The markets don’t like uncertainty. The U.K. now has to negotiate its exit and besides Greenland it’s never been done before, so there are more questions right now than answers. Localize it to this area of the world and financial institutions will be hit the hardest. But it’s less likely it’ll be Washington Trust that’s affected as much as it’s institutions like Barclays or [The Royal Bank of Scotland].
PBN: Will that change in the event other countries follow Britain’s lead and hold referendums to exit the European Union?
ICE:
I think the only one that’s really going to matter is Germany and maybe France to a lesser degree. Germany is really the one footing the bill in the European Union, so if they start to waver, all of the E.U. will fall apart.
PBN: What effect will the falling pound have on the U.S. market?
ICE:
What’s more of an issue is the trade. The markets are global and trade global under most documentation. This could make it more difficult; growth estimates are down, which will hurt banks.
PBN: How does it affect the global, U.S. and local financial sector, specifically?
ICE:
There’s going to be uncertainty for a little bit, so we can’t ignore it in Rhode Island. I was a little surprised about the short-term volatility. In the long term, it’s still all about U.S. trade and job growth and keeping us away from a recession. Any time the markets get hit that hard, they re-estimate GDP, meaning we’re going to creep out of this recession even slower. And I would assume most people in Rhode Island with any wealth have most of it outside of Rhode Island because there’s only so much you can invest in here, so there may be an impact there.
PBN: What other impact might we see on the local economy?
ICE:
It’s certainly going to distract everyone for a while. It’ll make it a little bit harder to do cross-border business, as regulatory environments will be a little different. Banks are the most global of institutions so that’s why they get so hurt. Rhode Island, in some ways, benefits from being this little when it comes to big global things because it’s not impacted as much.

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