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New thoughts on efficient markets

In: Proceedings of FIKUSZ '09

Author

Listed:
  • Helena NAFFA

    (Corvinus University of Budapest)

Abstract

The globally widespread economic crisis that burst in 2007 has been a central topic of recent papers. Economists and researchers have been pointing out that the crisis underpins the downfall of the efficient market hypothesis (EMH), as part of a search for the roots of the crisis. This undermined the belief in the traditional asset-pricing theories and models. Several papers have surfaced that highlight the role of the EMH in the economic crisis, and have therefore doomed the theory governing market mechanism as dead. This paper presents the current debate and takes the side of proponents of the EMH who argue that that this assertion is flawed, and the EMH remains the most appropriate proxy for understanding market forces. It is the only quantifiable approach to model market prices that is still in use by analysts and investors today.

Suggested Citation

  • Helena NAFFA, 2009. "New thoughts on efficient markets," Proceedings of FIKUSZ '09, in: László Áron Kóczy (ed.),Proceedings of FIKUSZ '09, pages 139-145, Óbuda University, Keleti Faculty of Business and Management.
    • Handle: RePEc:pkk:sfyr09:139-145
    as

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    File URL: http://uni-obuda.hu/users/vecseya/RePEc/pkk/sfyr09/Naffa_Helena.pdf
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    References listed on IDEAS

    as
    1. Jean‐Michel Courtault & Yuri Kabanov & Bernard Bru & Pierre Crépel & Isabelle Lebon & Arnaud Le Marchand, 2000. "Louis Bachelier on the Centenary of Théorie de la Spéculation," Mathematical Finance, Wiley Blackwell, vol. 10(3), pages 339-353, July.
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    More about this item

    Keywords

    efficient market hypothesis; asset pricing models; sub-prime credit crisis;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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