Understanding and regulating the UK’s financial performance is of increasing concern since the financial crisis. The world-class research undertaken by our finance faculty spans four core themes – Innovation and Asset Pricing, Corporate Finance, Finance and Risk Management, and Financial Analysis – engaging with and disseminating research to practitioners, policy-makers and academic colleagues to develop a more robust financial system.


Entrepreneurship is widely accepted as a key driver of economic growth and is a central policy priority across the world. While access to capital is viewed as one of the biggest hurdles to starting and growing a new business, the manner in which financing constraints for startups are invoked in academic work and policy frameworks is often poorly fleshed out.

This lack of clarity is also reflected in the way policy makers sometimes invoke images of Silicon-Valley-type venture capital backed entrepreneurship when proposing reforms that are tailored towards small businesses with low growth potential.  

This project aims to quantify and address financing frictions facing "high potential entrepreneurship" through three related areas of inquiry:

  • characterising the financing sources and constraints facing high-potential entrepreneurs and small and medium-sized enterprises that are responsible for driving employment and productivity growth in the economy;
  • developing adaptations to venture capital’s funding model to overcome specific financing hurdles facing the translation and scale-up of science-based ‘deep tech’ ventures;
  • understanding the dynamics of agglomeration in emerging industries, with a particular focus on how capital markets policy can impact where clusters of frontier technologies emerge.

Principal Investigator: Ramana Nanda 

Funder: European Research Council

Duration: July 2020 – June 2025

This project studies the mechanisms through which access to finance and the relaxation of informational frictions for firms can promote economic growth. These frictions tend to be exacerbated during financial crisis and economic downturns, such as the one generated by the recent pandemic.

A big challenge in the field of corporate finance is to establish causality, and cleanly identify the impact of these frictions on corporate outcomes. To overcome this challenge, I exploit a public policy program of credit certification of firms that was introduced in Portugal in 2008 by a governmental agency as a laboratory to estimate the impact of informational and financial frictions on corporate performance. This programme has unique features that allow for a Multidimensional Regression Discontinuity Design to estimate the causal economic impact of firm certification, and access to external financing. I will investigate both in detail, and in a comprehensive approach the channels through which the links between informational frictions, access to financing and firm performance operate.

The richness of the data on Portuguese firms makes it possible to understand the role of productivity, investment, innovation, human capital (employment), and trade. Last, I will study externalities generated by firm certification on a broader network, which includes other firms in their supply chain, but also financial institutions.

This research has obvious and crucial policy implications for governments because it will measure the economic effects of alleviating financing constraints for SMEs, and it will provide a better understanding of the channels through which financing and informational frictions operate to impact firm performance and growth.

Principal Investigator: Cláudia Custódio

Funder: European Research Council | Horizon 2020

Duration: December 2019 – November 2024

In the face of accelerating climate change, firms and investors are confronted with major new challenges while financial markets are expected to play a major new role in the fight against the effects of this crisis.

The rise of institutional investors – asset managers, insurance companies, pension funds, and sovereign wealth funds – which together own more than 70 per cent of the shares of publicly traded companies, means that these agents are de facto the critical actors to aggregate investor preferences on climate change and engage with companies on their behalf.

This research project is divided into two major themes:

  • determining how financial markets provide the asset price signals and information to help investors shape their portfolio strategies in the face of climate change risk;
  • identifying how institutional investors approach climate change and engage with companies to lead them to accelerate the transition towards renewable energy.

These two themes cannot be separated from public policy towards climate change, and the broader context of the global fight against climate change by governments, municipalities, regulators and society at large. With this in mind, a major aspect of the research is to make explicit how public policy shapes corporate behaviour through the actions of institutional investors.

Principal Investigator: Patrick Bolton

Funder: European Research Council

Duration: July 2020 – June 2025