Evolution in Finance Research: Epistemology, Paradigm and Critics

Abstract

The objective of this article was to analyze the theoretical-methodological evolution in the finance area, emphasizing the important stages, marking their contributions and contradictions, with special emphasis in the dominant paradigm and the post-modern critics. It is a theoretical reflection with an ad hoc revision of the literature. It is observed that around the fifties and sixties of the twentieth century there was a methodological and theoretical revolution in finance research that, due to the adoption of the foundations of the positivist functionalism, took this to be more normative, quantitative and close to the natural sciences, losing their classic characteristics of being positive, and the recognition of its capacity of affecting the research object, the individuals and companies' financial behavior. Only in the last two decades there seems to be some alternative proposals, among them behavioral finance studies. That approach had shown important contributions to finance studies, even though is being hardly challenged by the dominant paradigm.

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Keywords: Finance research, Epistemology, Paradigm, Modern finances, Behavioral finance

JEL Classification: G1, G3, M2, B4