What Is Finance Theory?

The history of financial theory in economics is quite short. Economists have long recognized the basic economic functions of the credit market, but they are not keen to analyze more. Therefore, the early views on financial markets were mostly intuitive and were mainly formed by practitioners. The earliest theoretical frameworks for financial markets, especially the work of Louis Bachelier (1900), were largely ignored by both theorists and practitioners.

Financial theory

(Economic theory)

The history of financial theory in economics is quite short. Economists have long recognized the basic economic functions of the credit market, but they are not keen to analyze more. Therefore, the early views on financial markets were mostly intuitive and were mainly formed by practitioners. The earliest theoretical frameworks for financial markets, especially the results of Louis Schelier (1900), were largely ignored by both theorists and practitioners.

Irving Fisher, 1867-1947.

John Maynard Keynes, 1883-1946.

Sir John R. Hicks, 1904-1989.

Nicholas Kaldor, 1908-1986.

Jacob Marschak, 1898-1977.

John Burr Williams, 1902-1989.

Investment Value Theory, 1938.

International Trade under Floating Exchange Rates, 1954.

The establishment and development of the "fundamental analysis" theory of asset valuation

Benjamin Graham, 1894-1976.

Samuel Eliot Gould

Inventory growth and discount table, 1931.

Usually considered the founder of the "intrinsic value" or "fundamental analysis" theory of the stock market

Modern Portfolio Theory (MPT)

Harry M. Markowitz, 1923-

James Tobin, 1918-

William Jack Baumol, 1922-

William F. Sharpe, 1934-

John Lintner, 1916-

Richard Roll

Arbitrage and equilibrium theory

Roy Radner, 1927-

Stephen A. Ross, 1944-

Fisher Black, 1938-

Myron S. Scholes, 1941-

Robert C. Merton, 1944-

Oliver D. Hart, 1948-

David M. Kreps, 1950-

Darrell J. Duffie

John Cox

Mark Rubinstein

Chi-Fu Huang

Jonathan E. Ingersoll

Finance and company

Merton H. Miller, 1927-

Franco Modigliani, 1918-

Michael C. Jensen, 1939-

Jacques H. Drèze, 1929-

Sanford J. Grossman

Joseph E. Stiglitz, 1943-

Paul R. Milgrom, 1948-

Douglas Gale, 1950-

Empiricist and efficient market hypothesis

Louis Bachelier, 1870-1946.

Holbrook Working, 1895- 1985.

Alfred Cowles, 3rd., 1891-1984

"Can stock market forecasters predict?" Econometrica, 1933.

"Transcendental Probability of Stock Market Behavior" with H. Jones, 1937, Econometrica.

Ordinary stock index, 1871-1937, 1938.

"Stock Market Forecast", 1944, Econometrica

"An amendment to conclusions about stock price behavior", 1960, Econometrica

As an outstanding businessman and investment consultant in the state of Rolando, Alfred Cowles believed in the importance of quantity in economics after countless failures to predict the failure of the 1929 crash. He himself studied the stock market data (especially 1933), provided an early proof of the "random walk" of stock prices, and began the "efficient market hypothesis." In 1930, Cowles founded and funded the Econometrica Society and Magazine, Econometrica, and in 1932 established the Cowles Economic Research Council. One of the first projects of the Cowles Committee was the monthly and annual reports (1938) of the development and analysis of the stock market index conducted by Cowles himself.

Oskar Morgenstern, 1902-1976.

Paul A. Samuelson, 1915-

Benoit B. Mandelbrot, 1924-

Hendrick S. Houthakker, 1924-

Eugene F. Fama, 1939-

Robert E. Lucas, Jr., 1937-

Burton G. Malkiel

Robert Shiller