JEL code G
Financial economics
How are assets priced, and why do financial systems break?
Emerged 1952
Harry Markowitz's article “Portfolio Selection” showed how investors can reduce risk by holding a mix of assets that differ in return and risk.
SourceEconLib, Concise Encyclopedia of Economics: Harry Markowitz (opens in a new tab)
An example
Diamond and Dybvig (1983) showed why banks are vulnerable to runs even when they are healthy. Nobel 2022.