Financial economics, or finance, is the study of how people and firms allocate scarce resources over time. The financial system consists of the set of markets, such as stocks, bonds and derivatives, and financial intermediaries (banks, insurance companies) that are used by people and firms for financial contracting and the exchange of assets and risks.
Given initial resources and transaction opportunities of the financial system, households and firms allocate assets (investment decision) and liabilities (financing decision) over time and over states of the world.
The Centre for Finance (CFF) focuses on multidisciplinary research on financial intermediation. Financial intermediaries are firms that borrow from consumers/savers and lend to companies that need resources for investment. Thus, financial intermediaries are central institutions for economic growth since the investment and financing processes are organized around them.
However, before the financial crisis in 2008, there was a widespread view that financial intermediaries could be ignored because they had no real effect. Our view is that the investment and financing decisions, the working of capital markets, corporate finance decisions, and financial consumer choices cannot be understood without studying financial intermediaries.
The major research areas at CFF and their relations to various disciplines are:
• Financial consumer behavior: Behavioral finance
• Credit risk modelling: Financial mathematics
• Studies of limit order books and high frequency trading: Financial econometrics
• Bank regulation: Bank management and law
• Delegated portfolio management: Contract theory and experimental finance
• Venture capital: Contract theory, law and finance
The research at CFF is financed by VINNOVA, Handelsbanken, The Second Swedish National Pension Fund (AP2), and the independent Savings Banks in Western Sweden (Sparbankerna i Västra Sverige).
Clearing houses and systemic risk
The need for speed: Minimum quote life rules and algorithmic trading
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Visit the website of Centre for Finance (CFF) at the University of Gothenburg