empirical finance

Empirical finance is the branch of finance that uses real-world data and statistical methods to study how financial markets and instruments behave. It involves analyzing historical data—such as stock prices, interest rates, or economic indicators—to identify patterns, test theories, and make informed predictions. This approach helps investors, policymakers, and researchers understand market dynamics, assess risks, and develop strategies based on evidence rather than guesswork or assumptions. Essentially, empirical finance translates complex financial phenomena into data-driven insights to improve decision-making in finance.