JEL Code

G01, G11, G14, G18, G32


The chief intellectual assumptions behind financial regulation are that capital markets are efficient and market participants act rationally. These assumptions have always been subject to some challenges and their empirical verification occupies a large portion of modern finance literature. Nevertheless, they represented the leading financial market theory during the decades preceding the 2007-8 crisis. The crisis demonstrated that modern theory does not allow for solid risk assessment and reliable macroeconomic forecasting. Such challenges suggest that modern finance may be facing a paradigm crisis. While a debate must be opened to assess how to move forward from the current mainstream paradigm, today there are no viable alternatives that can replace the current paradigm.

Submission Date

January 2020

Approval Date


Publication Date


Included in

Finance Commons