Research at Duisenberg school of finance

Duisenberg school of finance’s priority research goal is to work at an integrated view of the financial system, breaking down traditional distinctions between corporate finance, banking, risk management and asset pricing.

The financial crisis has revealed our limited understanding of interrelations among financial markets, individual biases and collective strategic choices of intermediaries. At present, finance subfields are compartmentalized, separated by inconsistent assumptions. While a simplifying framework is appropriate to treat very specific issues, an integrated view to capture the interaction of markets and incentives is essential to understand modern financial markets and guide regulatory reforms, a critical issue in future years.

The goal is to learn to model dysfunctional financial markets, whether dysfunctional behaviour emerges from behavioural distortions or incentive problems in the intermediation process. This will offer tools to understand mispricing and excess risk creation, to incorporate them into valuation and risk choices, and ultimately to inform the debate on financial regulatory reform.

While all relevant financial themes belong to the scope of the agenda, priority research areas identified are behavioural finance, broadly defined, and financial regulation.

Enrico Perotti
Research Director