Mathematical  Culture and Thought

Mathematical Culture and Thought

A Brief History of Mathematics in Finance

Document Type : Translation

Author
Department of Applied Mathematics‎, ‎University of Mazandaran‎, ‎Iran
Abstract
In the list of possible scapegoats for the recent financial crises‎, ‎mathematics‎, ‎in particular mathematical finance has been ranked‎, ‎without‎ ‎a doubt‎, ‎as the first among many and quants‎, ‎as mathematicians are known in the industry‎, ‎have been blamed for developing and using‎
‎esoteric models which are believed to have caused the deepening of the financial crisis‎. ‎However‎, ‎as Lo and Mueller (2010) state “Blaming‎
‎quantitative models for the crisis seems particularly perverse‎, ‎and akin to blaming arithmetic and the real number system for accounting‎
‎fraud.” Throughout the history‎, ‎mathematics and finance have always been in a close relationship‎. ‎Starting from Babylonians‎, ‎through‎
‎Thales‎, ‎and then Fibonacci‎, ‎Pascal‎, ‎Fermat‎, ‎Bernoulli‎, ‎Bachelier‎, ‎Wiener‎, ‎Kolmogorov‎, ‎Ito‎, ‎Markowitz‎, ‎Black‎, ‎Scholes‎, ‎Merton and many‎
‎others made huge contributions to the development of mathematics while trying to solve finance problems‎. ‎In this paper‎, ‎we present a brief‎
‎historical perspective on how the development of finance theory has influenced and in turn been influenced by the development of mathematical‎
‎finance theory.
Keywords

Subjects


Akyıldırım‎, ‎E.‎, ‎Mete Soner‎, ‎H.‎, ‎A brief history of mathematics in finance‎, Borsa Istanbul Rev., ‎14 (2014)‎, ‎57-63‎.

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Volume 42, Issue 2 - Serial Number 73
December 2023
Pages 297-311

  • Receive Date 12 November 2022
  • Revise Date 17 November 2022
  • Accept Date 04 April 2023
  • Publish Date 22 December 2023