Rethinking Finance in the Face of New Challenges

David Bourghelle, Roland Pérez & Philippe Rozin (eds.) (2021)

Bingley: Emerald

Rethinking Finance in the Face of New Challenges provides an overview of the new research perspectives devoted to financial activity, reconsidering the opposition between orthodox and heterodox schools of finance. The purpose is to identify new theoretical and practical issues around the concepts of values, radical uncertainty, and financial instability, but also to examine the consequences of the financialisation process on the dynamics of organisations and markets, as well as on value production mechanisms.
This fifteenth volume of Critical Studies on Corporate Responsibility, Governance and Sustainability begins by exploring the globalisation and financialisation of economies, central banks and corporate strategies before switching to focus on financial value as a historically situated social construct. The book then examines the relationship between finance, social value and sustainable development and presents several avenues for reflection with a view to a paradigmatic renewal of research and teaching in finance.
At a time when an unprecedented infectious and sanitary crisis is generating disastrous financial, economic, social and societal repercussions, the work presented in this book will stimulate reflection and contribute to the renewal of a Finance that now has to face many new social, societal and environmental challenges.

Table of contents

Preface. Financial Values as Social Fact; Andre Orléan
Introduction. Rethinking Finance In The Face Of New Social, Societal and Environmental Challenges; David Bourghelle and Philippe Rozin
Part I. Finance, Financialization In A Global Market Introduction. Finance and Financialisation In A Global World; Yamina Tadjeddine
Chapter 1. Financial Instability and Temporality Conflicts In Financialized Capitalism; Renaud du Tertre
Chapter 2. Unconventional Monetary Policies: New Normal Or ‘‘Black Hole”? 2019: The Year Of Truth; Jacques Ninet
Chapter 3. On The Financialization Of Business Strategies; Roland Pérez
Chapter 4. How To Fight Financialization; Paul Jorion
Part II. The Construction Of Financial Values: An Historical Perspective Introduction: The Construction Of Financial Values: A Historical Perspective; Catherine Karyotis
Chapter 5. Paving The Way Towards Financialization: The French Case Of State Venality Of Offices (Century15th-17th; Nicolas Pinsard
Chapter 6. The Institutional Architecture Of Value: Appraisals and The Formation Of Bubbles In The Financialized Real Estate Sector; Marine Duros
Chapter 7. Accounting As A Political Object; Edouard Jourdain
Part III. Social Reality and The New Financial Structures: Sustainable and Participatory Finance Introduction. Responsible Finance and Social Impact: Assessing Alternative Forms Of Social Engagement and Value Creation; Sharam Alijani
Chapter 8. Social Impacts and Their Contracts; Florence Jany-Catrice and Marion Studer
Chapter 9. The Crowdfunding: Towards A Commodification Of Generosity?; Amélie Artis and Virginie Monvoisin
Chapter 10. Sustainable Finance: Concepts, Analyses and Perspectives; Dhafer Saidane and Sana Ben Abdallah
Part IV. Finance, Markets and Society: Rethinking The Paradigm? Introduction. Finance, Markets and Society: Rethinking The Paradigm; Roland Pérez
Chapter 11. Economics and Finance: The Monopoly and Dangers Of The Mainstream School Of Thought; Marc Chesney
Chapter 12. Can Behavioral Finance Be The Foundation For New Regulation?; Sabrina Chikh and Pascal Grandin
Chapter 13. Collective Affects and Speculative Bubbles In Financial Markets: A Spinozist Perspective; David Bourghelle and Philippe Rozin
Chapter 14. Teaching Finance Through A Social Science Lens; Stéphanie Serve and Yamina Tadjeddine
Conclusion. Finance and Sustainability: An Integrated Thinking; Thomas Lagoarde-Segot, Roland Pérez, and William Sun
Postscript; Michel Levasseur

“However, heterodox approaches that are alternatives to standard theory offer innovative conceptual frameworks, able to give a different perspective (behavioural finaroe, fiancial convention theory, regulation theory, sustainable finance, social studies of finance, etc.).” (Bourghelle & Rozin, p. 2)

“This chapter considers financial instability as a phenomenon endogenous to the functioning of capitalism. Consequently, it seeks to identify the main sources and different forms of the latter in financialised capitalism. According to Keynes, capital assets prices are conceived as the expression of financial conventions. It is, therefore, important to distinguish between the returns expected by company directors, bankers, holders of equity titles, risk-takers and, in contrast, risk-averse holders of debt securities. Minsky enriches the analysis by attributing a decisive role to the leverage effect, at the origin of an accumulation of financial weaknesses in the balance sheets of non-financial agents during the expansion phases preceding financial crises. Regulation theory leads to the introduction of a distinction between the financial accelerator and the leverage effect. The first establishes a procyclical relationship at the macroeconomic level between the price of capital assets and the debt ratio of non-financial agents; the second acts at the microeconomic level through shareholder corporate governance, which determines the institutional conditions inciting firm directors to integrate shareholder expectations into their return forecasts. The empirical analysis identifies three forms of financial instability in financialised capitalism: the long-term financial cycle governed by the debt ratio of non-financial agents; the business cycle governed by the impact of stock prices on investment; and the short-term or even very short-term expected return revisions of financial actors. Its originality is to show that these three forms of instability acquire different characteristics depending on the national economy considered.” (Renaud du Tertre, p. 13)

“This paper analyses the construction of value under the context of radical uncertainty (Keynes, 1936; Orléan, 1987) in the financialised real estate sector in France. It is based on a participant observation of valuation practices in an international real estate consulting firm and 26 in-depth interviews with professionals of the sector. We show that these practices rely on an institutional architecture that participates in the consolidation and legitimisation of the accumulation activity of asset managers and thus in the feeding of real estate bubbles in the hearts of large metropolises. Completing the conventionalist approach of value (Orléan, 2011) by focussing on the functioning of the organisations involved in the valuation process, I show that the determination of value is less the result of the emergence and autonomisation of a collective belief through market relationships than the product of power relationships between agents integrated in hierarchical professional organisations and in a specific legal framework.” (Marine Duros, p. 115)

Link to the book

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