Research

The Centre’s Research Themes

The initial key research themes to be undertaken by the Centre are in the following three areas.

Market Design and Market Quality

Within any market setting, ensuring that markets operate at the highest level requires a thorough understanding of the structure of the market place, as well as ensuring that any changes thereto are transparent, fair and efficient (collectively known as market quality).

With measures of fairness and efficiency constructed using data that underlies the market, one becomes capable of evidence-based decision making. The central tenet of this research theme is that all forms of securities markets operate in a fashion that allows relevant data to be analysed in a way that can help improve the quality of the market.

Practically implementing the concepts of market quality to address these concerns first requires an understanding of the intricacies of how the market place functions, namely the nature of the technology underpinning the market, how the market is regulated, how information is disseminated within the market, the participants involved in the market and the underlying instruments (or services) within the market.

This research theme is led by Professor Andrew Lepone.

Investment Management

The Investment Management theme generates contemporary investment management research. We have an exceptional Faculty that draws on the experience of leading thinkers, including academics from leading university business schools, independent consultants, central bankers, regulators and professional investors to generate world leading research in the investment field.

Academics within the Department of Applied Finance are currently working with various partners in the investment fields who are interested in research across a range of topics in the managed funds area, and are making financial contributions to fund this research. This funding is used to provide Research Grants to academics in relevant fields at universities across the country. These industry providers of funding are also prime candidates for taking on PhD students.

This research theme is led by Professor Tom Smith.

Experimental and Behavioural Finance

This research theme combines theory with lab and field experiments in the policy space. The lab experiments enable researchers to explore fundamental theoretical questions aimed at behavioural policy interventions. The advantage of lab experiments lies in testing whether solutions (mechanisms) to affect behaviour in ways predicted by theory. Practitioners are often reluctant to adopt new solutions because of high risk (“If it has never been done, how do you know it works?”); this is where experiments help.

By employing cutting-edge techniques in experimental economics, we can observe all relevant variables in a controlled environment, as well as implement true exogenous changes that allow for causal inference. There are numerous unobserved and uncontrolled phenomena that affect people’s decisions that can be identified and measured with laboratory methods.

Additionally, clean initial measurement of data and better control of the structure of interaction between decision makers allows a reduction in the use of assumption-intensive econometric techniques. Such precision is possible if the researchers observe all relevant variables in a controlled environment and can minimize a wide range of preferences affecting decision makers that are often present yet unobservable in everyday situations.

This research theme is led by Professor Maroš Servátka.