The genesis of the 2008 global financial crisis and challenges to the neoclassical paradigm of finance
AbstractIn the first step, this paper briefly discusses the macroeconomic background of the 2008 financial crisis. Next, we take a wider approach and we look at systemic changes that global economics, and financial markets in particular, had undergone. We wonder if these transformations, and their effects so dramatically demonstrated in 2008, give grounds to modify the theoretical background of finance. The neoclassical paradigm might be seen as an idealized normative benchmark. On the other hand, behavioral approach helps explain deviations from this benchmark, however itself it lacks the normative character. We conclude that in contemporary circumstances an interdisciplinary approach is needed in the search for an adequate theory, as the financial world is getting more and more complex and dynamic.
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Bibliographic InfoArticle provided by Elsevier in its journal Global Finance Journal.
Volume (Year): 22 (2011)
Issue (Month): 3 ()
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Web page: http://www.elsevier.com/locate/inca/620162
Neoclassical financial economics; Behavioral finance; Financial crisis;
Find related papers by JEL classification:
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- G20 - Financial Economics - - Financial Institutions and Services - - - General
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