A financier who made a fortune in the investment business using ideas developed at the University of Chicago has donated $300m (£191m) to the graduate business school, which is being renamed in his honour.

It is the largest gift ever to the university, and the largest to any business programme in the world.

The donor is 61-year-old David G Booth, founder and chief executive of Dimensional Fund Advisors, as well as his wife Suzanne and their two children. The school will be called the University of Chicago Booth School of Business, or Chicago Booth for short.

The money comes with "no restrictions, no strings attached", said Booth, who earned an MBA from the school in 1971. "I am hoping that others will join me in giving back to this amazing business school."

The No 1 priority will be recruiting and retaining the most elite and promising scholars. Dean Edward Snyder, who will administer the funds, vows to be "quite aggressive" in searching for stars. "There may be a lot of great schools not hiring next year," he said. "This is a really good time to push on faculty."

The school also will use the gift to expand its international presence beyond its present London and Singapore campuses. Its existing research centres will get more resources, and new faculty groups will be formed to study topics not normally associated with business schools, all projects that appeal to Booth, said Snyder.

"He doesn't want to limit us, classify us or direct us," said Snyder, who also serves as an economics professor at the school. "He wants us to keep doing what we're doing." The gift won't be used to fund routine operating expenses, or reduce published tuition rates for students, although aid will increase, Snyder said.

Booth arrived at the school on Chicago's south side from his native Kansas 39 years ago as a PhD candidate and research assistant to finance professor Eugene Fama. The brash and brilliant Fama taught the future mega-donor's first class at the school - "a life-changing event for me", Booth recalled.

Fama is famous for the efficient market hypothesis, which says investors should not be able to beat the market, since share prices already reflect all available information.

Booth and partner Rex Sinquefield, another Chicago MBA student, built their Dimensional Funds around Fama's idea, beginning in 1981. "The unifying theme is that markets work," Fama said. "I was involved with them from the first day."

The gift from the Booth Family Trust includes an undisclosed upfront payment, an income stream from shares in the parent company of Dimensional, and a payout if the shares are sold. Together, those components are valued at $300m.

Before Booth's gift, the largest gift to a business school was $105m given to Stanford University's Graduate School of Business in 2006 by Phil Knight, founder and chairman of Nike.

Other large gifts to business schools include $100m to the University of Michigan in 2004 from real-estate developer Stephen Ross, $85m to the University of Wisconsin at Madison in 2007 from a combined partnership of 13 alumni and $60m to the Darden School at the University of Virginia from Frank Batten Sr, retired chairman and chief executive of Landmark Communications.