The Efficiency of Financial Markets - Theory and Practice

The discussion on the theory of financial markets' efficiency has been taking place for many years. The theory in question has many proponents and opponents. According to this theory markets are concerned to be efficient if all available information is included in asset prices. It means, that investors are not able to get extra profits even when using special investing techniques. Anyway empirical research shows that markets are not efficient. In 2001 G. A. Akerlof, A. M. Spence and J. E. Stiglitz got the Nobel Prize for their research in the field of the information asymmetry. The theory of information asymmetry was constructed on the bases of experiences coming from the real financial market activity. The authors defined four main elements of it: adverse selection, moral hazard, herding behavior and the free-riders' activity. Owing to the theory of asymmetry information it was able to explain the anomalies ii the financial markets' activity, but any new model describing the way in which financial markets work was not invented.Zadanie pt. „Digitalizacja i udostępnienie w Cyfrowym Repozytorium Uniwersytetu Łódzkiego kolekcji czasopism naukowych wydawanych przez Uniwersytet Łódzki” nr 885/P-DUN/2014 zostało dofinansowane ze środków MNiSW w ramach działalności upowszechniającej nauk