TY - JOUR
T1 - A brief history of mathematics in finance
AU - Akyildirim, Erdinç
AU - Soner, Halil Mete
N1 - Publisher Copyright:
© 2014 Borsa ̄stanbul Anonim Şirketi.
Copyright:
Copyright 2018 Elsevier B.V., All rights reserved.
PY - 2014/3/1
Y1 - 2014/3/1
N2 - In the list of possible scapegoats for the recent financial crises, mathematics, in particular mathematical finance has been ranked, without a doubt, as the first among many and quants, as mathematicians are known in the industry, have been blamed for developing and using esoteric models which are believed to have caused the deepening of the financial crisis. However, as Lo and Mueller (2010) state "Blaming quantitative models for the crisis seems particularly perverse, and akin to blaming arithmetic and the real number system for accounting fraud." Throughout the history, mathematics and finance have always been in a close relationship. Starting from Babylonians, through Thales, and then Fibonacci, Pascal, Fermat, Bernoulli, Bachelier, Wiener, Kolmogorov, Ito, Markowitz, Black, Scholes, Merton and many others made huge contributions to the development of mathematics while trying to solve finance problems. In this paper, we present a brief historical perspective on how the development of finance theory has influenced and in turn been influenced by the development of mathematical finance theory.
AB - In the list of possible scapegoats for the recent financial crises, mathematics, in particular mathematical finance has been ranked, without a doubt, as the first among many and quants, as mathematicians are known in the industry, have been blamed for developing and using esoteric models which are believed to have caused the deepening of the financial crisis. However, as Lo and Mueller (2010) state "Blaming quantitative models for the crisis seems particularly perverse, and akin to blaming arithmetic and the real number system for accounting fraud." Throughout the history, mathematics and finance have always been in a close relationship. Starting from Babylonians, through Thales, and then Fibonacci, Pascal, Fermat, Bernoulli, Bachelier, Wiener, Kolmogorov, Ito, Markowitz, Black, Scholes, Merton and many others made huge contributions to the development of mathematics while trying to solve finance problems. In this paper, we present a brief historical perspective on how the development of finance theory has influenced and in turn been influenced by the development of mathematical finance theory.
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U2 - 10.1016/j.bir.2014.01.002
DO - 10.1016/j.bir.2014.01.002
M3 - Article
AN - SCOPUS:84954058901
SN - 2214-8450
VL - 14
SP - 57
EP - 63
JO - Borsa Istanbul Review
JF - Borsa Istanbul Review
IS - 1
ER -