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Given its scope, as above, financial economics tends to deal with the workings of financial markets, such as the stock market, and the financing of companies, and includes the following subject areas Budgeting, saving, investing, borrowing, lending, insuring, hedging, diversifying, and asset management. Because the future is never known with certainty, a central concern of financial economics is the impact of uncertainty on resource allocation. Financial economics thus attempts to answer questions such as Financial economics is based on many assumptions - chief amongst these, that financial decision makers are rational (see Homo economicus; Efficient market hypothesis). However, recently, researchers in Experimental economics and Experimental finance have challenged this assumption empirically. Further, these assumptions are challenged - theoretically - by Behavioral finance, a discipline primarily concerned with the rationality, or lack thereof, of economic agents.
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Financial Economics Articles
New Chinese Investment Rules Spur Economic Growth In Region
by Murad Ali
Jan 02, 2007
China stocks soared after mainland authorities announced progressive rules in order to increase access of Chinese entities to foreign investments. The new rules will help individuals, investment firms, financial houses and banks to invest in foreign ...
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