How fragile are the highly complex modern financial markets and banking systems? Analysis of Systemic Risk in financial markets helps to understand in how far the financial sector is a source of instability, which impedes the optimal intertemporal allocation of resources, adversely affects technological progress and forces private savers to take excessive risk.
How does decentralized information processing evolve under financial innovation? How does technological ambiguity impact evaluation of firms and how are heterogeous informations aggregated in a market?
How does the financial structure and the implied way price formation and financial innovation interact with centralized monetary policy? Does discretionary Monetary Policy cause bubbles and overinvestment cycles?