Capital Markets

This programme examines how different types of agents interact in financial markets; how asset prices are formed and relate to economic fundamentals; how price movements impact firms’ investment and the macro-economy; and how regulatory policies affect market outcomes and economic welfare. 

Part of the research in this programme is conducted within the Paul Woolley Centre (PWC). Research at the PWC departs from the Arrow-Debreu view of frictionless markets and emphasizes the role of financial institutions and their managers’ incentives in influencing asset prices and the allocation of capital in the economy, and in causing occasional mispricing and misallocation. 

Other research in this programme focuses on recovering investor expectations of asset returns from asset prices; on connecting asset prices and risk premia to macroeconomic fundamentals; on understanding investors’ behavioural or cognitive biases and their implications for portfolio choice and asset prices; and on measuring empirically deviations between asset prices and fundamental values.

We disseminate research insights through the FMG newsletter, lecture series, conferences, and other events that bring together academics and practitioners from the financial sector, corporations, regulators, and policy makers. 

Flagship events and activities

The Paul Woolley Centre conference

This is an annual conference that has been run for sixteen years since 2008. The conference focuses on the main themes of the PWC, namely the effects of financial intermediaries on asset prices and the allocation of capital in the economy. Over the years, the conference has attracted an excellent set of speakers and papers. 

Conference on non-bank financial institutions

This is an annual conference organized jointly by the PWC, the Brevan-Howard Centre at Imperial College and the Bank of England (BoE). The aim of this conference is to bring together researchers and policymakers to discuss and share insights on the financial stability implications of non-bank financial institutions’ behaviour, as well as on the risks and resilience of market infrastructure. 

Workshops and conference on behavioural finance

These activities are organized by the London Behavioural Finance Group (LBFG), which is led by a member of the FMG Capital Markets Programme together with one faculty member at Imperial College and one at Oxford University. Two meetings of LBFG take place in a typical year. One of the meetings is for job market candidates on the market to present behavioral-related work. The other is the annual cognitive foundations of finance conference held either at the LSE or at Bocconi University. 

The Programme Director is Dimitri Vayanos.