Market Shaping as an Answer to Ambiguities
AbstractBuilding on Smith (1989), we describe the social processes surrounding a new financial OTC derivatives market, the market for credit derivatives. We show that in contradiction with more traditional derivatives, credit derivatives generate ambiguities of a cognitive and political nature. By conducting an in-depth longitudinal qualitative study from 1996 to 2004, we document the efforts made by the promoters of the market to alleviate these ambiguities and show how the amount of resources needed results in the leadership of the most powerful. We thus provide a socially based explanation for the concentration and lack of transparency of the market. Our research exemplifies the contradictions between the rhetorical justification of financial innovations provided by financial theory and the empirical realities of a modern derivative market. It suggests that the actual structure of the market might best be understood by paying attention to the way different cognitive and political communities react to these contradictions.
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Bibliographic InfoPaper provided by HAL in its series Post-Print with number halshs-00340046.
Date of creation: 2009
Date of revision:
Publication status: Published, Organization Studies, 2009, 30, 5, 549-575
Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00340046/en/
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Web page: http://hal.archives-ouvertes.fr/
Social studies of finance; social construction of value; financial innovation; OTC markets; cognitive and political ambiguities;
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