A Historical Review of Research in Finance

This work is a historical perspective of finance, which examines the seminal and groundbreaking literature work in the area of finance since 18th century. The purpose of this work is to examine and interpret the evolution and transformation of finance theories. This study links the work of popular scholars with the economic requirement of their times and outlines the abandonment and transformation of some theories overtime. Early finance theories were focused on theoretical explanations of economic and business phenomena by assuming ideal market conditions. The rising anomalies and unrealistic assumptions in explaining finance concepts led to a paradigm shift towards behavioural perspective of individual decision making. Behavioural finance became the dominant paradigm since 21st century. It is impossible to study the whole literature in finance and hence the study is based on the most prominent and cited articles which led to the development of new theories.