From tools to theories: The emergence of modern financial economics
AbstractIt is shown that early research in modern financial economics had substantially been driven by the application of the research strategy of economics and the use of newly developed mathematical methods. For this purpose the professionalization of business education as a consequence of changes in the U.S. economy after Word War II is presented. The emergence of professional Journals in financial economics, similar to the academic culture including the trend of applying abstract mathematical reasoning and during the war developed methods like linear programming are highlighted. Also the meaning of Milton Friedman's 1953 essay The Methodology of Positive Economics for the dominance of abstract and prediction driven research in modern financial economics gets discussed. Finally, the emergence of Harry Markowitz's paper Portfolio Selection (1952) is used to substantiate the hypothesis. --
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Witten/Herdecke University, Faculty of Management and Economics in its series Discussion Papers with number 16/2011.
Date of creation: 2011
Date of revision:
Contact details of provider:
Postal: Alfred-Herrhausen-Straße 50, 58448 Witten
Phone: +49 (0)2302/926-584
Fax: +49 (0)2302-926-585
Web page: http://www.uni-wh.de/wirtschaft/
More information through EDIRC
history of finance; portfolio theory; business schools; modern financial economics; modelling; theories of modern financial economics; risk management; positivism; professionalization; methodology of finance;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-13 (All new papers)
- NEP-HIS-2011-12-13 (Business, Economic & Financial History)
- NEP-HPE-2011-12-13 (History & Philosophy of Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Debreu, Gerard, 1991. "The Mathematization of Economic Theory," American Economic Review, American Economic Association, American Economic Association, vol. 81(1), pages 1-7, March.
- Whitley, Richard, 1986. "The transformation of business finance into financial economics: The roles of academic expansion and changes in U.S. capital markets," Accounting, Organizations and Society, Elsevier, vol. 11(2), pages 171-192, March.
- Samuels, Warren J., 2002. "Machine Dreams: Economics Becomes a Cyborg Science. By Philip Mirowski. New York: Cambridge University Press, 2002. Pp. xiv, 655. $35.00, paper," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 62(03), pages 913-915, September.
- Hausman,Daniel M. & McPherson,Michael S., 2006. "Economic Analysis, Moral Philosophy and Public Policy," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521846295.
- Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 56, pages 279.
- Blaug,Mark, 1997. "Economic Theory in Retrospect," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521577014.
- J. Fred Weston, 1967. "The State Of The Finance Field," Journal of Finance, American Finance Association, American Finance Association, vol. 22(4), pages 539-540, December.
- Blaug, Mark, 2003. "The Formalist Revolution of the 1950s," Journal of the History of Economic Thought, Cambridge University Press, Cambridge University Press, vol. 25(02), pages 145-156, June.
- Donald MacKenzie, 2006. "An Engine, Not a Camera: How Financial Models Shape Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262134608, December.
- L. V. Kantorovich, 1960. "Mathematical Methods of Organizing and Planning Production," Management Science, INFORMS, INFORMS, vol. 6(4), pages 366-422, July.
- Hausman,Daniel M. & McPherson,Michael S., 2006. "Economic Analysis, Moral Philosophy and Public Policy," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521608664.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.