In An Engine, Not a Camera, Donald MacKenzie argues that the emergence of modern economic theories of finance affected financial markets in fundamental ways. These new, Nobel Prize-winning theories, based on elegant mathematical models of markets, were not simply external analyses but intrinsic parts of economic processes. Paraphrasing Milton Friedman, MacKenzie says that economic models are an engine of inquiry rather than a camera to reproduce empirical facts. More than that, the emergence of an authoritative theory of financial markets altered those markets fundamentally. For example, in 1970, there was almost no trading in financial derivatives such as "futures." By June of 2004, derivatives contracts totaling $273 trillion were outstanding worldwide. MacKenzie suggests that this growth could never have happened without the development of theories that gave derivatives legitimacy and explained their complexities. MacKenzie examines the role played by finance theory in the two most serious crises to hit the world's financial markets in recent years: the stock market crash of 1987 and the market turmoil that engulfed the hedge fund Long-Term Capital Management in 1998. He also looks at finance theory that is somewhat beyond the mainstream—chaos theorist Benoit Mandelbrot's model of "wild" randomness. MacKenzie's pioneering work in the social studies of finance will interest anyone who wants to understand how America's financial markets have grown into their current form.

Risk management is a foundation discipline for the prudent conduct of investment management. Being effective requires ongoing evolution and adaptation. In The World of Risk Management, an expert team of contributors addresses the important issues arising in the practice of risk management. A common thread among these distinguished articles is a rigorous theoretical or conceptual basis as well as their practical significance. The topics include not only broad policy considerations but also detailed how-to prescriptions.

This book presents an ethical theory for financial transactions that underpins the stability of modern economies. It combines elements from history, ethics, economics and mathematics to show how these combined can be used to develop a pragmatic theory of financial markets. Written in three sections; section one examines the co-evolution of finance and mathematics in an ethical context by focusing on three periods: pre-Socratic Greece, Western Europe in the thirteenth century and North-western Europe in the seventeenth century to demonstrate how the historical development of markets and finance were critical in the development of European ideas of science and democracy. Section two interprets the evidence presented in section one to provide examples of the norms reciprocity, sincerity and charity and introduce the pragmatic theory. Section three uses the pragmatic theory to interpret recent financial crises, address emergent phenomena and relate the theory to alternative contemporary theories of markets. Presenting a unique synthesis of mathematical and behavioural approaches to finance this book provides explicit ethical guidance that will be of interest to academics and practitioners alike.

How the financial crisis really happened, and what it really meant: 3 books packed with lessons for investors and policymakers! These three books offer unsurpassed insight into the causes and implications of the global financial crisis: information every investor and policy-maker needs to prepare for an extraordinarily uncertain future. In Financial Shock, Updated Edition, renowned economist Mark Zandi provides the most concise, lucid account of the economic, political, and regulatory causes of the collapse, plus new insights into the continuing impact of the Obama administration's policies. Zandi doesn't just illuminate the roles of mortgage lenders, investment bankers, speculators, regulators, and the Fed: he offers sensible recommendations for preventing the next collapse. In Extreme Money, best-selling author and global finance expert Satyajit Das reveals the spectacular, dangerous money games that are generating increasingly massive bubbles of fake growth, prosperity, and wealth, while endangering the jobs, possessions, and futures of everyone outside finance. Das explains how everything from home mortgages to climate change have become fully financialized... how "voodoo banking" keeps generating massive phony profits even now... and how a new generation of "Masters of the Universe" has come to own the world. Finally, in The Fearful Rise of Markets, top Financial Times global finance journalist John Authers reveals how the first truly global super bubble was inflated, and may now be inflating again. He illuminates the multiple roots of repeated financial crises, presenting a truly global view that avoids both oversimplification and ideology. Most valuable of all, Authers offers realistic solutions: for decision-makers who want to prevent disaster, and investors who want to survive it. From world-renowned leaders and experts, including Dr. Mark Zandi, Satyajit Das, and John Authers

LECTURING BIRDS ON FLYING For the past few decades, the financial world has often displayed an unreasonable willingness to believe that "the model is right, the market is wrong," in spite of the fact that these theoretical machinations were largely responsible for the stock market crash of 1987, the LTCM crisis of 1998, the credit crisis of 2008, and many other blow-ups, large and small. Why have both financial insiders (traders, risk managers, executives) and outsiders (academics, journalists, regulators, the public) consistently demonstrated a willingness to treat quantifications as gospel? Nassim Taleb first addressed the conflicts between theoretical and real finance in his technical treatise on options, Dynamic Hedging. Now, in Lecturing Birds on Flying, Pablo Triana offers a powerful indictment on the trustworthiness of financial theory, explaining—in jargon-free plain English—how malfunctions in these quantitative machines have wreaked havoc in our real world. Triana first analyzes the fundamental question of whether financial markets can in principle really be solved mathematically. He shows that the markets indeed cannot be tamed with equations, presenting a long and powerful list of obstacles to prove his point: maverick unlawful human actions rule the markets, unexpected and unimaginable events shape the markets, and historical data is not necessarily a trustworthy guide to the future of the markets. The author then examines the sources of origin of many prevalent theories and mathematical dictums. He details how the field of financial economics evolved from a descriptive discipline to an abstract one dedicated to technically concocting professors' own versions of how such a world should work. He goes on to explain how Wall Street and other financial centers became eager employers of scientists, and how scientists became eager employees of financial firms. Triana concludes with an in-depth discussion of the most significant historical episodes of theory-caused real-life market malaise, with a strong emphasis on the current credit crisis. In the end, Lecturing Birds on Flying calls for the radical substitution of good old-fashioned common sense in place of mathematical decision-making and the restoration to financial power of those who are completely unchained to the iron ball of classroom-obtained qualifications.

This book is about what Mark Carney has called ‘the social licence for financial markets’ and how it can point us towards a more sustainable future. Author David Rouch argues that what it reveals contrasts sharply with the usual portrayals of markets as places of unrestrained financial self-interest. Drawing attention to a more complex reality and the presence of justice-focused aspirations in finance can positively impact individual, institutional, and systemic behaviour: change, not imposed by regulators, but emerging from the very substance of market relationships. The finance sector should have a key role in addressing humanity’s increasingly pressing sustainability challenges. Yet the relationship between finance and society has not recovered from the 2008 crisis and the scandals and austerity that followed. The Covid-19 pandemic and its economic fallout is sharpening some of the issues and creating new ones. Recognising that financial markets operate subject to a social licence has the potential to galvanise market participants in tackling these challenges, strengthening social solidarity on which markets also depend, and to provide coordinates for navigating a way through the post-pandemic social, political and economic landscape.