A revolution in finance?

The focus of this study is current research practices in the international academic field of finance and is undertaken with a view to how the field is positioned to innovate and move forward in the 21st century. The study takes two approaches. First, chapter 2 looks at the literature and uses Knhn's structure of scientific revolutions as a framework to examine the development of the field over the last 50 years. Particular emphasis is placed on intellectual shifts occurring in the last decade that are emanating from cross disciplinary research and manifesting in approaches at odds with the traditional rational expectations paradigm-perceptibly shifting the boundaries of the field. These new approaches are based on previously disparate disciplines such as: psychology, neuroscience, evolutionary biology, and sociology. By critically examining the nature of the new approaches, this chapter determines whether they indeed offer 'alternative' paradigms as claimed. The focus of this study is current research practices in the international academic field of finance and is undertaken with a view to how the field is positioned to innovate and move forward in the 21st century. The study takes two approaches. First, chapter 2 looks at the literature and uses Knhn's structure of scientific revolutions as a framework to examine the development of the field over the last 50 years. Particular emphasis is placed on intellectual shifts occurring in the last decade that are emanating from cross disciplinary research and manifesting in approaches at odds with the traditional rational expectations paradigm-perceptibly shifting the boundaries of the field. These new approaches are based on previously disparate disciplines such as: psychology, neuroscience, evolutionary biology, and sociology. By critically examining the nature of the new approaches, this chapter determines whether they indeed offer 'alternative' paradigms as claimed. Second, the study investigates how current leading scholars view today's research arena. By eliciting the views of editors, reviewers and senior academics in the field, the intent is to establish a benchmark for the 'state of the field' in the early 21st century and to raise our awareness of current research practices-what they are, what maintains them, and how they might evolve. The interpretive field study methodology is the subject of chapter 3.Analysis is theoretically informed by two perspectives: systems thinking and ethnography and is designed to address the following questions: 1.What influences the 'system' of academic finance to work the way it does? 2.Can it work differently? 3.How does it interact with and respond to components of its wider environment? Chapters 4 and 5 present the findings of the study. First, within the mainstream, there is a taken-for-granted view that research is bound by mathematical modeling, and testing of the model, primarily within the neoclassical rational expectations framework. Second, research quality is evaluated by the rigorous application of quantitative methods. In this manner, methods are asserted rather than justified-empowering mathematical modeling and testing as representing what 'good' research is all about. Third, although finance is viewed from within as an applied field, there is evidence of tension or lack of effective communication between theory and practice. Overall, the findings indicate research practices are defined within relatively narrow boundaries. Thus, it is not surprising there is a feeling among the field's gatekeepers that there is nothing new, that the field has reached maturity-in the sense we know the questions, if not all the answers. Chapter 6 concludes and outlines the limitations of the study. This chapter also makes a case for finance to engage more meaningfully in dialogue on epistemological issues and engage in self appraisal as a force for innovation and change