Mathematical whizkids and former physicists-turned bankers are almost becoming dime a dozen in the financial world.But there's a truism that's been rife in the banking sector for decadesFrance turns out a high number of quantitative analysts.Financiers take to theforums to ask whyand associations have been set up to highlight and help France's deluge of quants to network. This association "Quant Valley" is even subtitled "Paris the City of Quants."And it can all be traced back to one maths genius Nicole El Karoui.On a basic level, quants what they're more commonly known as in banking usecomputers to tell them what to buy and sell. However, the programmes and analysis require a deep level of pure mathematics and algorithms that only a very neat pool of professionals would understand.French-TunisianEl Karoui is an architect in this field and has been instrumental in shaping France's academic institutions in the way they teach quantitative finance.French universities now rank amongst the top in the world for churning out the high-calibre and highest-paid finance graduates. For example, the average finance graduate from Ecole Polytechnique in France will earn around74,000 ($115,000).In fact, there are seven French universities in the top 15 for best paid financial graduates in the world. Famously, some ofworld's famous quants, and rogue traders, hail from a number of these universities.The woman that shaped France's reputation for quantsThose under the tutelage of professorEl Karouiare famously sought after in London's Square Mile and New York's Wall Street. The Paris-based maths professor, who teachesthe niche art of creating and pricing complex financial instruments linked to stocks, bonds and loansderivatives, is theco-director, with Marc Yor and Gilles Pags, of the Master of Advanced Studies programme Probability & Finance (more commonly known as"DEA El Karoui"). The programme iscurrently jointly operated by cole Polytechniqueand the Pierre and Marie Curie University.It also is now one of themost prestigious programmes in quantitative finance in the world.In 2006, just before the shine was taken off those trading in complex derivatives bythe credit crisis, the media like The Wall Street Journal highlighted what a huge deal it was for finance students to study under the famous French quant expert."When I talk about El Karoui's master's, everyone knows," said a French student at the timeXavier Charvet to the WSJ.Rama Cont, a former student and nowProfessor of Mathematics and Chair in Mathematical Finance atImperial College London, said El Karoui's name was"the magic word that opened doors for young people."At the time, the WSJ reported that banking headhunters sought after the 75 or so students that were being tutored inEl Karoui's "Probability and Finance" course. In the same report,head of BNP Paribas's US equity and derivatives department in New York,Amine Belhadj, even said thatEl Karoui "played a crucial role in finding interns when the bank began handling derivatives for clients in 1989."Rise and fall of French quantsElKaroui shaped the banking world from the outside-in, and with this, a plethora of French quants would floodthe shores of the US and the UK.Immediately following her help in the late 1980s for banks finding the right talent in the derivatives sector, French universities were developing programmes that used her teachings and methodsto focus on the very, very complex modeling of derivatives,reported Newsweek. British or other European universities were not on the same page.Instead UK and European bankswould siphon in Frenchtalent.But the French talent did come at a pricelike Frankenstein's monster,El Karoui'stheories and methods, which were taught in all the major French universities, were being misused.Thetraders that lost a ridiculous amount of money (legally or illegally) and became household names for itwere oftenFrench and hailed from French university derivatives tutelage.Goldman Sachs' one time wonder kid,Fabrice Fabulous Tourre, came from the elitecole Centrale Paris. Unfortunately, he was dubbed the"face of Wall Street greed" by US regulatorSecurities and Exchange Commission (SEC) and was fined391,000 ($650,000) and told to hand back a 112,000 ($175,000) bonus for defrauding investors in the run up to the credit crisis.Former trader Bruno Iksildubbed "The London Whale" for his massive legal market betswas also a derivatives wizard that reportedly went tocole Centrale. While he was at the centre of the $6.2 billion (4 billion) JP Morgan legal trading loss of 2012, when massive derivatives bets went sour, he was a massive profit generator for the bank previously.Critics say that traders that don't come from the same calibre of university, such as Jerome Kerviel, also make huge mistakes like financial wizards, such as Iksil and Tourre, toprove their worth.Kerviel, a former trader at Societe Generale's lost $5.8 billion (3.7 billion) in rogue tradesand graduated from the less prestigious and "provincial" university(University of Lyon).Join the conversation about this storyNOW WATCH: This is how rapper 50 Cent made millions and then lost it
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