The Centre for Applied Finance and Economics has three main research groupings:
1) Applied Economics and Public Policy
The aim of research incorporated under this theme is to provide in-depth analysis to address real-world problems at the intersection of economics and public policy. A variety of economic methodologies and theoretical frameworks will be used to inform and evaluate public policy and social issues as they impact on the lives of Australians and on citizens globally.
Current research interests focus on the overlap between economic analysis and public policy in the areas of:
- Cartels and business history;
- taxation law, compliance and history
- environmental impact of transportation
- Economics of health policy and system reform
- Economic growth and productivity growth in the long run
- Roles of R&D, innovations and human capital in augmenting growth of nations
- Theoretical and empirical analysis of auctions
- Economic analysis of cognitive functioning and ageing
- Corruption and special interest group behaviour
- Sports Economics
- Econometric evaluation of policy and social programs
- Economic interconnections, monetary regionalism, and income growth convergence in emerging market economies (EMEs)
2) Market Quality, Fairness, Integrity, Financial Intermediation and the Role of Financial Regulation
This research concentration specialises in merging financial theory and practice. Researchers have expertise in the following areas:
Capital Markets, Asset Pricing and Market Microstructure
The era of ‘high speed’ and ‘dark’ trading has brought extra focus to the capital markets. With such trading activities comes the expectation that regulators and market operators will continue to ensure ongoing improvements in the fairness and efficiency of capital markets. Our research is around topics such as asymmetric information around news announcements, efficient capital markets, market quality, price discovery, high-frequency trading, limit order book demand and supply, short selling, pairs trading and related stocks trading. Through links to the Capital Markets CRC, operators and investor groups, our research is uniquely positioned to provide research outcomes for the benefit of all market participants.
Behavioural Finance relaxes the assumption held in traditional finance that people act rationally in order to maximise their wealth. By incorporating cognitive theories, Behavioural Finance examines how individuals make financial decisions and the consequential outcomes in financial markets and households. Our research focuses on the empirical application of Behavioural Finance at both individual and institutional level. Moreover, in our research we aim to gain a higher level of understanding of the behaviour and performance of market participants. Currently our research involves topics of risk perception and the effect of social interaction on investing.
Corporate Finance, Corporate Governance and Environmental Issues in Financial Economics
Maximising shareholders’ wealth is a prime focus of any corporation. Corporate Finance suggests different strategies and techniques through which a corporation can increase its value. Strategies, such as corporate acquisitions, short-term and long-term financing, issuance of debt/equity, and capital investment are being investigated and interesting results documented for the broader society.
Following the Kyoto Protocol on climate change, a series of environmental regulations have emerged leading to behavioural changes in our society. Similar to engineers who are building products that reduce emissions, finance scholars and practitioners are reacting to these new regulations. Environmental Finance documents the changes occurring in the financial system as a result of these environmental regulations.
Quantitative Finance and Banking Risk Management
Over the last few decades quantitative (mathematical) finance has provided solutions to many unresolved questions (e.g. asset pricing, arbitrage return, investment strategy) by merging theoretical developments in mathematical finance with practical application in financial markets. We have strong research interests in quantitative and mathematical finance, particularly in creating advanced methodologies, as well as in performing empirical and applied work in risk management and derivatives modelling.
The area of Banking Risk Management encompasses a number of fields within the area of financial economics. These include the operation and regulation of banks, corporate finance, financial education and asset pricing. Centre members’ research interests include: the risk management of non-performing loans and the composition and measurement of regulatory capital; the development and efficiency of transition economy banking and financial systems; the importance of governance and institutional structures in delivering efficient outcomes in transition and emerging-market economies; the impact of ownership concentration, particularly state control, on stock return performance in emerging market and transition economies; the changing geographic locus of control and industry concentration of the world’s largest companies.
3) Strategy, International Business and Entrepreneurship (SIBER)
Globalization of markets is continuing at an unprecedented pace, facilitating the interdependency of national markets via cross-border trade and investment. In harmony with this megatrend, we have witnessed a proliferation of multinational business enterprise activity.
The Australian economy’s growth prospects are now largely tied to the larger developments in the Asia-Pacific region. A key development in the region is the rise of a new middle-class which can now enjoy better life styles thanks to stepped up disposable income.
The SIBER scholars are focused on both the macro developments in the region as well as the activities of business enterprises that are cultivating market opportunities. They represent a multi-disciplinary group, examining success and challenges of these enterprises - whether small start-ups, new ventures, born-globals, small older domestic firms or larger established organisations. These firms are all embarked on a strategy of international expansion – both pre/initial market entry and post-entry/development and consolidation phases. In addition to producing scholarly output published in recognized refereed journals, SIBER scholars wish to inform government agencies as well as business and industry groups promoting entrepreneurial and international business activity.