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Analysis of the Financial Crisis, or Crisis in Financial Analysis?

Finance Reconsidered: New Perspectives for a Responsible and Sustainable Finance

ISBN: 978-1-78560-980-0, eISBN: 978-1-78560-979-4

Publication date: 2 September 2016



The goal of this chapter is to discuss the foundations of ‘modern finance’, its paradigm and conceptual framework, its methods and tools, its practices and results, its governance and regulation.


The first part presents the characteristics of ‘modern finance’ and its negative effects. The second part analyses the efforts made to remedy those effects and argue about the need for a real reform.


Several aspects are pointed, for example an unreasonable ‘normality’, incentives that encourage excess, the spread of subprime crisis, etc. The contemporary finance is a ‘giant with clay feet’.


We need to proceed with a dual reembeddedness of finance in the economy and economy in society.




This chapter is a new, updated and extended version of a paper published in 2010 (Pérez R., 2010). At that time, I wrote: ‘This paper is not a completed work (insofar as research can be considered complete) but a waypoint in an ongoing research programme. This programme has been provisionally entitled “For a new paradigm in finance.” My feeling is that the current paradigm, devised in the 1950s by the pioneering work of Markowitz, Tobin and Modigliani & Miller is now “exhausted” (in the meaning defined by Kuhn), as evidenced by the current global financial crisis. It is therefore necessary to start working on a new paradigm, a task that will involve reasoned criticism of the current paradigm. Our research is part of this critical process. A certain amount of preliminary work has already been done’.

Subsequently, an international research programme entitled ‘Finance and Sustainability’ (FAS) was devised in 2009 with a view to a contribution at the 10th IFSAM World Conference in Paris in July 2010. It was coordinated by a researchers’ collective – R. Pérez (U. Montpellier, France), C. Louche (Vlerick Gent-Leuven, Belgium), W. Sun (Leeds Met U., UK) – brought together on the basis of a partnership between two networks – RIODD (Réseau international de recherche sur les organisations et le Développement Durable) and CGSIG (Corporate Governance and Sustainability International Group), in liaison with a number of other institutions including CRIFA (Club recherche de l’Institut français des administrateurs), FIR (Forum de l’Investissement responsable – French SIF) and ISMEA (Institut de sciences mathématiques et économiques appliquées). Over the last few years, the members of the FAS collective have taken part in a number of scientific meetings and events organised either within the programme framework of on the initiative of partner institutions.

This joint project has resulted in several publications, including a new ‘Entreprise et finance’ series (KF), derived from the K series ‘Economie de l’entreprise’ by the review Économies et Sociétés (ISMEA) and the first collective work in a dedicated series from Emerald Publishing: Sun, Louche, and Pérez (2011). 18

As the author, I would like to thank everyone who has encouraged me with this project and made observations and comments on the first draft and took part in the related discussions. Special thanks to Gérard Charreaux, Pierre-Yves Gomez, Daniel Lebègue, Michel Levasseur, Frédéric Lobez, François Morin, Hélène Rainelli, Yves Simon for the first version of the paper (Pérez R., 2010), then Denis Dupré, Catherine Karyotis, Céline Louche, Jacques Ninet, Bernard Paranque, Jean-Michel Servet, William Sun, Henri Zimnovitch for this current version. Of course, I remain solely responsible for any errors or omissions.


Pérez, R. (2016), "Analysis of the Financial Crisis, or Crisis in Financial Analysis?", Finance Reconsidered: New Perspectives for a Responsible and Sustainable Finance (Critical Studies on Corporate Responsibility, Governance and Sustainability, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 111-141.



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