Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

The efficient markets hypothesis: The demise of the demon of chance?

The efficient markets hypothesis: The demise of the demon of chance? Many commentators have suggested that economists in general and financial economists in particular have some responsibility for the recent global financial crisis. They were blinded by an irrational faith in a discredited Efficient Markets Hypothesis and failed to see the bubble in asset prices and to give due warning of its collapse. There is considerable confusion as to what this hypothesis is and what it says. The irony is that the strong implication of this hypothesis is that nobody, no practitioner, no academic and no regulator had the ability to foresee the collapse of this most recent bubble. While few economists believe it is literally true, this hypothesis is considered a useful benchmark with some important practical implications. Indeed, a case can be made that it was the failure to believe in the essential truth of this idea, which was a leading factor responsible for the global financial crisis. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

The efficient markets hypothesis: The demise of the demon of chance?

Brown, Stephen J.
Accounting & Finance , Volume 51 (1) – Mar 1, 2011
Download PDF
17 pages

Loading next page...
 
/lp/wiley/the-efficient-markets-hypothesis-the-demise-of-the-demon-of-chance-88YNjePTwh

References (61)

Publisher
Wiley
Copyright
© 2010 The Author. Accounting and Finance © 2010 AFAANZ
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/j.1467-629X.2010.00366.x
Publisher site
See Article on Publisher Site

Abstract

Many commentators have suggested that economists in general and financial economists in particular have some responsibility for the recent global financial crisis. They were blinded by an irrational faith in a discredited Efficient Markets Hypothesis and failed to see the bubble in asset prices and to give due warning of its collapse. There is considerable confusion as to what this hypothesis is and what it says. The irony is that the strong implication of this hypothesis is that nobody, no practitioner, no academic and no regulator had the ability to foresee the collapse of this most recent bubble. While few economists believe it is literally true, this hypothesis is considered a useful benchmark with some important practical implications. Indeed, a case can be made that it was the failure to believe in the essential truth of this idea, which was a leading factor responsible for the global financial crisis.

Journal

Accounting & Finance – Wiley

Published: Mar 1, 2011

There are no references for this article.