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Theory of financial risk

Author

Listed:
  • Estrada, Fernando

Abstract

This paper examines relationships between theory of financial risk and size. Based on the work of Makridakis / Taleb [2009] and Taleb / Tapiero [2009], presents the problems of excessive risk and imbalances caused by the size of firms. Markets mixed on firm growth traps externalities can influence risk, high-cost for the commons. A policy of regulation and control in markets, while necessary, are still insufficient in economies with little institutional support. Externalities of risk and firm size categories are fundamental to understanding the present financial crisis since the economies of scale.

Suggested Citation

  • Estrada, Fernando, 2011. "Theory of financial risk," MPRA Paper 29665, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:29665
    as

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    File URL: https://mpra.ub.uni-muenchen.de/29665/1/MPRA_paper_29665.pdf
    File Function: original version
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    References listed on IDEAS

    as
    1. Fujiwara, Yoshi, 2004. "Zipf law in firms bankruptcy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 337(1), pages 219-230.
    2. repec:spr:isorms:978-0-387-72776-9 is not listed on IDEAS
    3. Makridakis, Spyros & Taleb, Nassim, 2009. "Decision making and planning under low levels of predictability," International Journal of Forecasting, Elsevier, vol. 25(4), pages 716-733, October.
    4. Saito, Yukiko Umeno & Watanabe, Tsutomu & Iwamura, Mitsuru, 2007. "Do larger firms have more interfirm relationships?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 383(1), pages 158-163.
    5. Goldenberg, J & Libai, B & Solomon, S & Jan, N & Stauffer, D, 2000. "Marketing percolation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 284(1), pages 335-347.
    6. Aleksiejuk, Agata & HoƂyst, Janusz A., 2001. "A simple model of bank bankruptcies," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 299(1), pages 198-204.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Finance; financial engineering; risk assesment.;

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • B0 - Schools of Economic Thought and Methodology - - General
    • Z1 - Other Special Topics - - Cultural Economics
    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G0 - Financial Economics - - General
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology

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