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A Review On The Relationships Among Adaptive Markets Hypothesis, The Efficient Markets Hypothesis And Behavioural Finance

Author

Listed:
  • Kubra SARITEPECI

    (Ilbank Inc., Türkiye)

  • Ayhan KAPUSUZOGLU

    (Ankara Yildirim Beyazit University, Türkiye)

  • Nildag Basak CEYLAN

    (Ankara Yildirim Beyazit University, Türkiye,)

Abstract

The Efficient Markets Hypothesis (EMH), which has had a significant impact on the field of finance since its development, has triggered many subsequent researches and some of the researches have brought a critical view to the Hypothesis. Two important alternatives have been put forward to overcome the criticisms and observed deficiencies of the EMH: Behavioural Finance and Adaptive Markets Hypothesis. Although various studies have been conducted to examine the relationship between these two approaches and the EMH, not much research has been conducted to examine their relationship with each other. In this study, the relationship between the Behavioural Finance approach and the Adaptive Markets Hypothesis, their similarities and differences are examined and it is aimed to complete this perspective that is felt to be lacking in the literature. The current study aims to cross-examine the hypotheses (EMH- Behavioural Finance, EMH- AMH), which are related to each other and try to answer the deficiencies seen separately, and in this way, it reveals that theories that are alternative to each other can also complement each other at various points and thus, when evaluated together, more effective evaluations can be made in the field of finance

Suggested Citation

  • Kubra SARITEPECI & Ayhan KAPUSUZOGLU & Nildag Basak CEYLAN, 2023. "A Review On The Relationships Among Adaptive Markets Hypothesis, The Efficient Markets Hypothesis And Behavioural Finance," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 22(2), pages 3-12.
    • Handle: RePEc:pts:journl:y:2023:i:2:p:3-12
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    References listed on IDEAS

    as
    1. Meir Statman, 1999. "Behaviorial Finance: Past Battles and Future Engagements," Financial Analysts Journal, Taylor & Francis Journals, vol. 55(6), pages 18-27, November.
    2. Andrew W. Lo, 2012. "Adaptive Markets and the New World Order (corrected May 2012)," Financial Analysts Journal, Taylor & Francis Journals, vol. 68(2), pages 18-29, March.
    3. Urquhart, Andrew & Hudson, Robert, 2013. "Efficient or adaptive markets? Evidence from major stock markets using very long run historic data," International Review of Financial Analysis, Elsevier, vol. 28(C), pages 130-142.
    4. Kian‐Ping Lim & Robert Brooks, 2011. "The Evolution Of Stock Market Efficiency Over Time: A Survey Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 25(1), pages 69-108, February.
    5. Hiremath, Gourishankar S. & Narayan, Seema, 2016. "Testing the adaptive market hypothesis and its determinants for the Indian stock markets," Finance Research Letters, Elsevier, vol. 19(C), pages 173-180.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Adaptive Markets; Efficient Markets; Behavioural Finance;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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