Mathematical models that help to avoid the next GFC are being developed by promising young researcher Jie Yen Fan.

After completing her Honours degree at Monash University, Ms Fan is undertaking her PhD using pure maths to develop models of the finance market.

Her research was last night recognised by the Victorian State Government with a prestigious research scholarship.

The models will aim to reflect the real world of finance in which some factors, such as interest rates, are closely regulated, while others, like stock prices, are not.

Ms Fan said that by holding some variables as constant and allowing others to be fluid, the models could be used by banks as the basis for smart decisions in developing loans or hedging finances.

“It’s quite difficult to explain what I do to friends who are not in the maths area, but I just love it,”Ms Fan said.

“Because I am doing pure mathematical research there is great satisfaction in solving whole sequences of problems in order to build up a model of what is going on.”

“Hopefully the outcomes can be applied in finance, but in the meantime, the PhD is an opportunity to contribute to our knowledge and understanding of fundamental maths.”

Modesty aside, what starts out as a series of complicated proofs on Ms Fan’s notepad could in future help decide billions of dollars worth of transactions.

The potential impact of her research has been acknowledged with a $150,000 Victorian International Research Scholarship.

Malaysian-born Ms Fan was one of seven students to be awarded a scholarship by Innovation, Services and Small Business Minister Ms Louise Asher at a ceremony at Parliament House last night.

Ms Asher said the scholarships were a key component of the ‘Leader in Learning’ initiative to support high-calibre students to make the most of their educational experience in Victoria.

“Victoria’s international students make a significant contribution to Victoria’s diverse, multicultural society and create the foundation for future global research, business and community links,” Ms Asher said.