In recent years, European financial ecomists have been brought together, via research projects and conferences, by the Centre for Ecomic Policy Research (CEPR). These fruitful interactions have contributed to the development of financial ecomics in Europe, and have generated a strong flow of interesting writing-both theoretical and empirical. The chapters in this volume reflect the depth and breadth of the research interests of European scholars in financial ecomics. The first section uses empirical analysis of financial market data to test the robustness of the pricing kernel model. The second section is on market microstructure, which is based on the observation of high frequency data. It explores the implications of asymmetric information and market imperfections. The third section points to how the study of speculation may link both the pricing kernel and the microstructure approaches. The final section on corporate finance suggests that contractual and agency problems have a significant impact on the pricing of financial assets.
Bruno Biais is Professor at the Universite des Sciences Sociales, Toulouse.; Marco Pagano is Professor of Economics at the University of Salerno.