The large research field of Finance has a strong theoretical foundation, a broad empirical basis and is of foremost practical relevance. From a material view it deals with basic problems of individual decisions on risky financial instruments. From a classical and behavioral view, it discusses why financial institutions like banks and insurance companies exist and how they should be optimally managed and regulated, and it analyzes the structure of optimal financial contracts and their values under different market regimes. Under methodological aspects it combines fruitfully advanced mathematical modeling techniques with numerical solution procedures, econometric estimation methods and statistical tests of the results. No other field in economics has confronted its theoretical results with empirical facts as much as Finance. The reason for this strong empirical orientation of Finance is the availability of excellent databases. These market data are often supplemented by data on individual decision making and by data on non-traded financial contracts, all available at the University of Mannheim. 

Fields of Research

The research of the Finance Group (Albrecht, Maug, Niessen-Ruenzi, Ruenzi, Terberger, Theissen, von Thadden (Economics),Weber, Demirci) covers all major fields in finance, including Asset Pricing, Banking, Behavioral Finance and Decision Making, Corporate Finance, Corporate Governance, Investment Management, and Insurance and Risk Management. The research results are regularly published in the leading finance journals, such as the Journal of Finance, the Journal of Financial Economics, and the Review of Financial Studies and faculty present their work at the prime international conference (American Economic Association, American Finance Association, European Finance Association, Western Finance Association).

Asset Pricing deals with theories of fair values of financial instruments and the impact of price, credit and liquidity risk on prices. It contributes to a better understanding of price movements on capital markets.

Behavioral Finance has become increasingly popular in recent years. This field addresses the problems of how individuals behave and how they build their expectations. While traditionally focusing on retail investors, behavioral finance now increasingly also analyzes the behavior of corporate managers and professional investors.

Corporate Finance deals with the optimal structuring of contracts with agents, equity and debt holders of a firm under symmetric and asymmetric information, while Corporate Governance is concerned with rules and regulations governing the firm and its optimal control.

Investment Management examines (optimal) investment strategies of individual investors and institutions as well as the dynamics and problems that arise when investors delegate investment decisions to, e.g., mutual funds or hedge funds.

Risk Management is strongly related with asset pricing, banking and corporate finance. It studies the exposure of financial and non-financial firms to market, credit, liquidity, operational and economic risk.