This Chapter traces the evolution of theories and methods in law and finance following the financial crisis in 2008. It begins by analysing the notion of financial (and other) markets as complex, adaptive systems before turning to a discussion of the efficient capital market hypothesis. It then looks at the emergence of prices as a learning process, in which agents adjust their expectations and actions to a changing environment. It also examines the implications of behavioural economics for law and finance, along with the coevolution of the legal and financial systems. In addition, the Chapter considers methodological issues arising in the context of the empirical study of law and finance, with reference to data-coding techniques (‘leximetrics’) and statistical methods (time-series econometrics). Finally, it discusses how financial crises can be better understood by means of a learning model of the policymaking process.
Anver M. Emon
This essay provides a historiographic introduction to the literature on Islamic finance. It situates the financial practice in terms of foundational principles; historical legal doctrines as reapplied in a contemporary financial context; and an institutional, regulatory framework developed over the course of the twentieth century. The rise of Islamic finance occurs at the intersection of excessive surplus wealth from the 1970 oil boom and an increasingly deregulated global financial sector in the 1980s; as such, this essay conceptually situates the Islamic financial order within the broader turn to free-market ideologies and policies globally.