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Theory of financial risk

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  • 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
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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. 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.
    3. Tapiero, Charles S., 2007. "Consumers risk and quality control in a collaborative supply chain," European Journal of Operational Research, Elsevier, vol. 182(2), pages 683-694, October.
    4. 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.
    5. 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.
    6. Robert M. May & Simon A. Levin & George Sugihara, 2008. "Ecology for bankers," Nature, Nature, vol. 451(7181), pages 893-894, February.
    7. Konstantin Kogan & Charles S. Tapiero, 2007. "Supply Chain Games: Operations Management And Risk Valuation," International Series in Operations Research and Management Science, Springer, number 978-0-387-72776-9, September.
    8. Bouchaud,Jean-Philippe & Potters,Marc, 2003. "Theory of Financial Risk and Derivative Pricing," Cambridge Books, Cambridge University Press, number 9780521819169.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Finance; financial engineering; risk assesment.;
    All these keywords.

    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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