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date: 23 January 2021

Abstract and Keywords

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.

Keywords: theories, methods, law, finance, financial crisis, financial markets, efficient capital market hypothesis, behavioural economics, leximetrics, time-series econometrics

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