Open AccessEMOTIONAL FINANCE: AS A NEW APPROACH TO UNDERSTANDING THE MARKETS
Author(s) -
Asiye Nur Dumanlı,
Selim Aren
Publication year - 2021
Publication title -
journal of life economics
Language(s) - English
Resource type - Journals
ISSN - 2148-4139
DOI - 10.15637/jlecon.8.2.03
Subject(s) - unconscious mind , narrative , mainstream , context (archaeology) , behavioral economics , social studies of finance , finance , economics , object (grammar) , positive economics , financial economics , psychology , political science , psychoanalysis , computer science , philosophy , paleontology , linguistics , artificial intelligence , law , biology
The emotional finance theory was developed as an alternative to the mainstream theories which claim that markets are driven by investors’ conscious processes. Based on psychoanalysis, it searches the role of both conscious and unconscious processes in investment decisions. It offers new explanations regarding the causes and forecasting of the crises and bubbles that have been experienced frequently especially since the 2000s. In this framework, it makes use of concepts such as narrative, group feel, states of mind, and phantastic object, which have not been previously included in finance studies to date. This study represents the most comprehensive literature study carried out in the field of emotional finance to date. It analyses and models the fundamental components of the theory in the context of their determinants and effects. It offers findings to help market regulators, fund managers and investors understand the bubbles that occur in the markets.