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Fibonacci and the Financial Revolution

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  • William N. Goetzmann

    (Yale School of Management, International Center for Finance)

Abstract

This paper examines the contribution of Leonardo of Pisa [Fibonacci] to the history of financial mathematics. Evidence in Leonardo's Liber Abaci (1202) suggests that he was the first to develop present value analysis for comparing the economic value of alternative contractual cash flows. He also developed a general method for expressing investment returns, and solved a wide range of complex interest rate problems. The paper argues that his advances in the mathematics of finance were stimulated by the commercial revolution in the Mediterranean during his lifetime, and in turn, his discoveries significantly influenced the evolution of capitalist enterprise and public finance in Europe in the centuries that followed. Fibonacci's discount rates were more culturally influential than his famous series.

Suggested Citation

  • William N. Goetzmann, 2004. "Fibonacci and the Financial Revolution," Yale School of Management Working Papers ysm19, Yale School of Management.
    • Handle: RePEc:ysm:somwrk:ysm19
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    References listed on IDEAS

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    Cited by:

    1. Stefan Behringer, 2016. "The Development of the Net Present Value (NPV) Rule ¨C Religious Prohibitions and Its Evolution," Review of Economics & Finance, Better Advances Press, Canada, vol. 6, pages 74-87, August.
    2. Laeven, Luc & Levine, Ross & Michalopoulos, Stelios, 2015. "Financial innovation and endogenous growth," Journal of Financial Intermediation, Elsevier, vol. 24(1), pages 1-24.
    3. Mark Koyama, 2008. "Evading the 'Taint of Usury' Complex Contracts and Segmented Capital Markets," Economics Series Working Papers 412, University of Oxford, Department of Economics.
    4. Timothy Johnson, 2015. "Reciprocity as a Foundation of Financial Economics," Journal of Business Ethics, Springer, vol. 131(1), pages 43-67, September.
    5. Diana A. Filip & Cyrille Piatecki, 2014. "In defense of a non-newtonian economic analysis," Working Papers hal-00945782, HAL.
    6. Balbir S. Sihag, 2017. "Kautilya, Fibonacci and Samuelson on Discounting," Advances in Management and Applied Economics, SCIENPRESS Ltd, vol. 7(2), pages 1-3.
    7. Timothy C. Johnson, 2013. "Reciprocity as the foundation of Financial Economics," Papers 1310.2798, arXiv.org.
    8. Mantilla-García, Daniel & García-Huitrón, Manuel E. & Concha-Perdomo, Alvaro & Aldana-Galindo, Julian R., 2023. "Is my pension fund more expensive? Estimating equivalent assets-based and contribution-based management fees," Journal of Business Research, Elsevier, vol. 167(C).
    9. Timothy C. Johnson, 2012. "Ethics and Finance: the role of mathematics," Papers 1210.5390, arXiv.org.
    10. Hrvoje Josic & Berislav Zmuk, 2020. "Can Croatian Urban Hierarchy Be Approximated With The Fibonacci Sequence? An Analysis On Historical Population Data," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 29(1), pages 3-28, june.
    11. Fragiskos Archontakis & Evan Osborne, 2007. "Playing It Safe? A Fibonacci Strategy for Soccer Betting," Journal of Sports Economics, , vol. 8(3), pages 295-308, June.

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    More about this item

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General
    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals

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