Finanzas y Economía Financiera (Finance and Financial Economics)

27 Pages Posted: 20 Jan 2017 Last revised: 24 Jan 2018

See all articles by Pablo Fernandez

Pablo Fernandez

University of Navarra - IESE Business School

Date Written: January 24, 2018

Abstract

Spanish Abstract: Este documento pretende contestar a la pregunta que me formulan frecuentemente alumnos y clientes: ¿son la misma cosa las finanzas y la economía financiera? Mi respuesta es NO: creo que son muy distintas a pesar de que se confundan los términos con mucha frecuencia y de que en muchas Business Schools muchos puestos de profesor de finanzas han sido ocupados por economistas financieros.

Dos modos, entre otros, de ver las diferencias: a) asistir a una sesión de finanzas para directivos impartida por un profesor de finanzas sensato y a otra de un profesor “economista financiero”; b) leer un libro de finanzas para directivos y otro de “economía financiera”.

La Economía Financiera es una disciplina desarrollada por economistas y que se dedica, sobre todo, a elaborar “modelos” cuyo parecido con la realidad es muy escaso (y su utilidad también). Las conclusiones que se derivan de los “modelos” también tienen muy poco parecido con lo que podemos observar en el mundo real: empresas, mercados financieros, inversores, directivos… El ejemplo más emblemático es el CAPM.

Este documento contiene hechos y también opiniones del autor. Agradeceré mucho comentarios (desacuerdos, errores, anécdotas…) que me ayuden a mí y a los lectores a diferenciar más objetivamente las finanzas y la economía financiera.

English Abstract: This document tries to answer to the following question: are equal finance and financial economics? My answer is no. The CAPM is about expected return. If you find a formula for expected returns that works well in the real markets, would you publish it? Before or after becoming a billionaire? The CAPM is an absurd model because its assumptions and its predictions/conclusions have no basis in the real world.

According to the dictionary, a theory is “an idea or set of ideas that is intended to explain facts or events”; and a model is “a set of ideas and numbers that describe the past, present, or future state of something”. With the vast amount of information and research that we have, it is quite clear that the CAPM does not “explain facts or events”, nor does it “describe the past, present, or future state of something”.

The use of CAPM is also a source of litigation: many professors, lawyers… get nice fees because many professionals use CAPM instead of common sense to calculate the required return to equity. Users of the CAPM make many illogical errors valuing companies, accepting/rejecting investment projects, evaluating fund performance, pricing goods and services in regulated markets, calculating value creation.

We all should try to explain a portion of “the world as it is”, not of “the world as we model it”. Ricardo Yepes, professor of philosophy of my university, wrote: “Learning means being able to keep perceiving reality as it truly is: complex - and not trying to fit every new experience into a closed and pre-conceived notion or overall scheme”.

Note: Downloadable document is in Spanish.

Keywords: Market Risk Premium; Required Equity Premium; Expected Equity Premium; Finance; Financial Economics

JEL Classification: G12, G31, M21

Suggested Citation

Fernandez, Pablo, Finanzas y Economía Financiera (Finance and Financial Economics) (January 24, 2018). Available at SSRN: https://ssrn.com/abstract=2900438 or http://dx.doi.org/10.2139/ssrn.2900438

Pablo Fernandez (Contact Author)

University of Navarra - IESE Business School ( email )

Camino del Cerro del Aguila 3
28023 Madrid
Spain
+34 91 357 0809 (Phone)
+34 91 357 2913 (Fax)

HOME PAGE: http://web.iese.edu/PabloFernandez/

Register to save articles to
your library

Register

Paper statistics

Downloads
560
Abstract Views
3,207
rank
48,416
PlumX Metrics