Prof. Jayanth R. Varma's Financial Markets Blog

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Prof. Jayanth R. Varma's Financial Markets Blog, A Blog on Financial Markets and Their Regulation

© Prof. Jayanth R. Varma
jrvarma@iima.ac.in

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Wed, 23 Mar 2011

Finance teaching and research after the global financial crisis

I have a paper on “Finance teaching and research after the global financial crisis” (the paper is also available here). The abstract is as follows:

Finance has come in for a great deal of criticism after the global financial crisis of 2007 and 2008. Clearly there were serious problems with finance as it was practiced in the years before the crisis. To the extent that this was only a gap between theory and practice, there is a need for finance practice to go back to its theoretical roots. But there is a need to re-examine finance theory itself.

The paper begins with an analysis of what the crisis taught us about preferences, probabilities and prices, and then goes on to discuss the implications for the models that are used in modern finance.

The paper concludes that the finance curriculum in a typical MBA programme has not kept pace with the developments in finance theories in the last decade or more. While a lot needs to change in finance teaching, finance theory also needs to change though to a lesser extent. Many ideas that are well understood within certain subfields in finance need to be better assimilated into mainstream models. For example, many concepts in market microstructure must become part of the core toolkit of finance. The paper also argues that finance theory needs to integrate insights from sociology, evolutionary biology, neurosciences, financial history and the multidisciplinary field of network theory. Above all, finance needs more sophisticated mathematical models and statistical tools.

Posted at 21:41 on Wed, 23 Mar 2011     10 comments     permanent link

Comments...

My ATM wrote on Thu, 31 Mar 2011 07:12

Re: Finance teaching and research after the global financial crisis

Yeah! I agree with everything you have said here that finance needs more sophisticated mathematical models and statistic tools to fight this financial crisis.Thank you for this great read.More power to you!

Ashley brown wrote on Fri, 08 Apr 2011 13:25

Finance teaching and research after the global financial crisis

really nice information about finance.. I really like your blog..very nice post, i certainly love this website, keep on it.. =============

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Kushankur, IRMA wrote on Sat, 09 Apr 2011 11:56

Re: Finance teaching and research after the global financial crisis

Your paper is really a signpost of future frontiers of finanical economics yet incisively analytic. Structuration of the paper under three heads: preferences, probabilities, and prices reminds me well of Correctness, Consistency (Zenios, 2007), and Stability (Wallace and Kaut, 2003)in regard to stochastic programming and decision criteria in an integrated environment.

Your last section aptly leaves a scope for inclusion of robust mathematical models which would achieve approximation of the event or any phenomenon. Still, argument can be posited in a manner that "wait and see" (Madansky and dantzig, 1955) model can approximate expected value with no recourse problem. Similarly, other models based on distribution can approxiamte through scenario generation and further evaluation.

Ashley wrote on Tue, 12 Apr 2011 11:57

Finance teaching and research after the global financial crisis

I wanted to thank you for this great read!! I definitely enjoying every little bit of it I have you bookmarked to check out new stuff you post… rally good information about finance.....

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karinabartram wrote on Mon, 23 May 2011 18:14

Re: Finance teaching and research after the global financial crisis

You give great idea. A collapse of the US sub-prime mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world.

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maxciriloy wrote on Sat, 14 May 2011 12:09

Re: Finance teaching and research after the global financial crisis

selected the books based on the topics that they teach and how reader friendly they are for their age range. The Bernstein Bears have a whole series on money.

http://www.savelolita.com/

Narahari wrote on Sun, 12 Jun 2011 14:53

Re: Finance teaching and research after the global financial crisis

Wonderful read Sir. Thanks !

Debit Card wrote on Mon, 09 Jan 2012 19:12

Re: Finance teaching and research after the global financial crisis

Really nice share. We must learn from our past mistakes. Financial crisis or 2007 and 2008 has give us an opportunity to see and learn what mistakes we have done. We must learn from this to secure better future. Very good paper. Keep it up.

Financial Management wrote on Thu, 02 Feb 2012 10:09

Re: Finance teaching and research after the global financial crisis

Its wonderful article.......... Present some more related articles.

Prof. Jayanth R. Varma wrote on Thu, 13 Dec 2012 17:16

Re: Finance teaching and research after the global financial crisis

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