Finance studies the workings of the financial system in an economy, and its role in channeling financial resources from suppliers of capital to its final users, and in allocating risk among investors. More specifically, finance examines the determinants of the investment, portfolio, and financing choices of firms and individuals, and their mutual interactions. These issues are examined both from a theoretical and an empirical perspective, employing a variety of tools ranging from game theory and stochastic calculus to econometrics and statistics.

The general area of finance can be divided broadly into three main fields: investments, corporate finance, and financial markets and institutions. Investments examines the determinants of portfolio allocation decisions of individual investors, and the implications for the pricing of financial instruments such as stocks, bonds, and derivative securities. Corporate finance examines the criteria that firms use in their capital expenditures decisions, and their choice of the financial instruments that are issued to finance these expenditures. Finally, the study of financial markets and institutions focuses on the role of financial intermediaries and organized securities exchanges in facilitating the funding of corporate investments, as well as the secondary market trading of financial instruments.

The Finance Area at INSEAD comprises a diverse group of faculty who are actively involved in research in several of the areas outlined above. Their current research interests include:

• European banking markets and the impact of the Euro;
• The decision to issue equity in an Initial Public Offer;
  
• Determinants of the cross-sectional variation of equity returns;
  
• The choice of dividend payments by firms;
  
• Price discovery in the Paris Bourse;
  
• The informational role of trading volume;
  
• The desirability and implementation of share buy-back plans;
  
• Optimal consumption and portfolio policies by investors; and
  
• Pricing and hedging of derivative securities.
  

The Finance faculty is well recognized for its excellence in research and has consistently produced articles in the top finance and economics journals, such as the Journal of Finance, the Review of Financial Studies, the Journal of Financial Economics, and the Journal of Political Economy, among others.

The aim of the PhD program in Finance is to produce highly trained individuals who will conduct first-class research at top academic institutions in the world. PhD students are required to undergo a rigorous training that will endow them with the fundamental tools needed to conduct high quality research, and will expose them to a variety of topics in the faculty's current areas of research. Graduates of the PhD program in Finance have been very successful in the academic job market, securing positions as Assistant Professors at the University of Chicago, University of California at Los Angeles (UCLA), Yale University, Purdue University, Stockholm School of Economics and Tulane University, among others.

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