Rethinking banking and finance: Money, markets and models

Abstract

The papers included in this special issue have been selected from the papers presented at the 2012 International Finance and Banking Society (IFABS) conference that was held in Valencia on 18–20 June, 2012, in collaboration with the University of Leicester, United Kingdom, University of Valencia and University of Jaume I, Spain.

The conference theme on “Rethinking Banking and Finance: Money, Markets and Models” was highly relevant since the effects of the financial crisis of 2008 have caused many, but by no means all economists and finance specialists to “rethink” their models of financial markets. As models have become progressively more rarified and disconnected from the practices and structures of actual financial markets then they have become less useful for generating insight and understanding of the complexities of modern economies. These models provide highly general results for economies that are stripped of institutional detail. Empirical models also estimate very general relationships and ignore the underlying processes and mechanisms that generate the results.

All these challenges, reshaping the financial economics research agenda in a way that leads us to “rethink” the banking and finance research that delves below the surface appearances of economic and financial relationships. The papers in this special issue cover a wide range of contemporary issues in banking and finance research and aim to improve our understanding of the global financial crisis and shed more light on the challenges ahead. We group the contributions in three areas: financial intermediation, risk analysis, and other research issues in finance.