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Market Shaping as an Answer to Ambiguities

Listed author(s):
  • Isabelle Huault


    (DRM - Dauphine Recherches en Management - Université Paris-Dauphine - CNRS - Centre National de la Recherche Scientifique)

  • Hélène Rainelli-Le Montagner


    (GREGOR - Groupe de Recherche en Gestion des Organisations - UP1 - Université Panthéon-Sorbonne - Institut d'Administration des Entreprises (IAE) - Paris)

Building 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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Paper provided by HAL in its series Post-Print with number halshs-00340046.

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Date of creation: 2009
Publication status: Published in Organization Studies, SAGE Publications, 2009, 30 (5), pp.549-575
Handle: RePEc:hal:journl:halshs-00340046
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