financial economics

Financial economics is a field within economics that analyzes how individuals, institutions, and governments raise and manage money and other financial assets. It examines the forces that determine prices, including those of goods, services, and the resources used in their production. This area of study also investigates how buyers and sellers interact in markets and the conditions necessary for a market mechanism to function.12

Historically, the stock market was not considered a primary subject for economic analysis, with the efficient market hypothesis suggesting securities prices were unpredictable. However, the growth of financial markets, deregulation, and increased data availability challenged this view, highlighting market volatility and "bubbles". Finance is an area where facts can be ambiguous, but the strong interest in these facts ensures the continued growth of financial economics.3