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Fibonacci and the Financial Revolution

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  • William N. Goetzmann

Abstract

This paper examines the contribution of Leonardo of Pisa [Fibonacci] to the history of financial mathematics. Evidence in Leonardo's Liber Abaci (1202) suggests that he was the first to develop present value analysis for comparing the economic value of alternative contractual cash flows. He also developed a general method for expressing investment returns, and solved a wide range of complex interest rate problems. The paper argues that his advances in the mathematics of finance were stimulated by the commercial revolution in the Mediterranean during his lifetime, and in turn, his discoveries significantly influenced the evolution of capitalist enterprise and public finance in Europe in the centuries that followed. Fibonacci's discount rates were more culturally influential than his famous series.

Suggested Citation

  • William N. Goetzmann, 2004. "Fibonacci and the Financial Revolution," NBER Working Papers 10352, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:10352
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    References listed on IDEAS

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    1. Greif, Avner, 1989. "Reputation and Coalitions in Medieval Trade: Evidence on the Maghribi Traders," The Journal of Economic History, Cambridge University Press, vol. 49(04), pages 857-882, December.
    2. Lin, Justin Yifu, 1995. "The Needham Puzzle: Why the Industrial Revolution Did Not Originate in China," Economic Development and Cultural Change, University of Chicago Press, vol. 43(2), pages 269-292, January.
    3. Graham, John R. & Harvey, Campbell R., 2001. "The theory and practice of corporate finance: evidence from the field," Journal of Financial Economics, Elsevier, vol. 60(2-3), pages 187-243, May.
    4. Alfred E. Lieber, 1968. "Eastern Business Practices and Medieval European Commerce," Economic History Review, Economic History Society, vol. 21(2), pages 230-243, August.
    5. Munro, John H., 2002. "The medieval origins of the 'Financial Revolution': usury, rentes, and negotiablity," MPRA Paper 10925, University Library of Munich, Germany, revised Sep 2002.
    6. Geoffrey Poitras, 2000. "The Early History of Financial Economics, 1478–1776," Books, Edward Elgar Publishing, number 2151, April.
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    Cited by:

    1. Laeven, Luc & Levine, Ross & Michalopoulos, Stelios, 2015. "Financial innovation and endogenous growth," Journal of Financial Intermediation, Elsevier, vol. 24(1), pages 1-24.
    2. Mark Koyama, 2008. "Evading the 'Taint of Usury' Complex Contracts and Segmented Capital Markets," Economics Series Working Papers 412, University of Oxford, Department of Economics.
    3. Timothy Johnson, 2015. "Reciprocity as a Foundation of Financial Economics," Journal of Business Ethics, Springer, vol. 131(1), pages 43-67, September.
    4. Timothy C. Johnson, 2012. "Ethics and Finance: the role of mathematics," Papers 1210.5390, arXiv.org.
    5. Diana Filip & Cyrille Piatecki, 2014. "In defense of a non-newtonian economic analysis," Working Papers hal-00945782, HAL.
    6. Balbir S. Sihag, 2017. "Kautilya, Fibonacci and Samuelson on Discounting," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 7(2), pages 1-3.
    7. Timothy C. Johnson, 2013. "Reciprocity as the foundation of Financial Economics," Papers 1310.2798, arXiv.org.

    More about this item

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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