The Academic Field of Finance and Paradigm Diversity

Kavous Ardalan, Ph.D., is associate professor of finance, School of Management, Marist College, Poughkeepsie, NY 12601

The Philosophical Foundation Of The Lecture Method Of Instruction And The Case Method Of Instruction: Implications For Examinations

Any adequate comparison between the lecture method of instruction and the case method of instruction necessarily requires a comparison of their underlying philosophical foundation and methodology. This is based on the premise that foundational philosophies or world views underlie educational philosophies, and each educational philosophy favors a certain instructional methodology, which in turn implies a certain way or method of instruction. More specifically, this paper discusses how each philosophical foundation implies a certain type of examination

Cash Flow Implied Interest Rate: A Unified Approach

One of the most important topics in finance is the concept of the discounted cash flow (DCF) analysis. A recurring problem in introductory finance textbooks requires the search for the cash flow implied interest rate, that is, the implied rate of return/cost on the cash flows. There are numerous instances of such applications - for example, the calculations of the yield to maturity (YTM) and the internal rate of return (IRR). Many students regard these instances as separate, unrelated, and totally context specific exercises, despite the fact that they are the results of the same DCF method and that only the symbols have changed. This paper suggests that the solution to this problem lies in emphasizing the underlying DCF-based unified approach (UA) to the cash flow implied interest rate (CFIIR) calculation which should be explicitly brought to the attention of students in every specific instance. This paper focuses on four related aspects of the discounted cash flow analysis in an attempt to clarify and to unify the threads under the concept of the implied interest rate: namely, first, the discussion of the UA to the CFIIR calculation; second, the step-by-step illustration of the equivalency of the present value and future value calculations; third, the simultaneous consideration of the two sides to a financial contract and the understanding of the corresponding rate of return to be earned by the provider of the funds and the percentage cost to be incurred by the recipient of the funds; and fourth, the explicit definition of the multi-period rate of return to an investor.&nbsp

Invisible Ideology of Mainstream Economics: The “Invisible Hand”

The purpose of this article is to show the ideological character of the “invisible hand,” which is the cornerstone of the mainstream economics. The article discusses how the “invisible hand” acts as a cognitive metaphor in mainstream economics' adoption of its worldview, its scientific view, its research methodology, and its mathematical rationality, which are spread in society through the educational system and the media. According to the “invisible hand,” the individuals' selfish interest automatically results in the improvement for society as a whole. The “invisible hand,” therefore, focuses on individual behavior and recommends abstraction from the social consequences of individual behavior. This atomistic view, together with its attendant abstraction from society as a whole, constitutes the foundation of the ideological character of the “invisible hand.” This is because it conceals the actual social consequences of what it supports

A Test of Two Open-Economy Theories: Oil Price Rise and Italy

The goal of the study is to empirically discriminate between two open-economy theories. The Keynesian theory holds that there is no, or only a very weak, homeostatic mechanism and, in the absence of government intervention, real income tends to remain below the level of full employment. In the monetary interpretation, the homeostatic mechanism is strong, and real income can be treated as though it were exogenous. This study examines the response of Italy to the sharp increase in oil prices in late 1973. The experience of Italy, as an oil-importing country, supports the monetarist view

The philosophical foundation of the lecture-versus-case controversy: Its implications for faculty teaching, research, and service

Purpose – To see how educational philosophies that underlie lecture and case methods of teaching are related to how faculty perform their teaching, research, and service. Design/methodology/approach – This paper is based on the premise that foundational philosophies, worldviews or paradigms underlie educational philosophies, and each educational philosophy favors a certain instructional methodology, which in turn implies a certain way or method of instruction. Findings – The findings of this paper are that each educational philosophy favors a certain instructional methodology, which in turn determines not only the way that the instruction is performed but also how faculty perform their teaching, research, and service. Research limitations/implications – This paper implies that differences between the underlying world views of lecture and case methods of teaching similarly lead to differences in many other aspects of the teaching and learning process. Practical implications – This paper implies that, in practice, faculty would perform their teaching, research, and service in a more consistent manner if they become consciously aware of the underlying philosophy of their teaching method. Originality/value – The original contribution of this paper is that it shows how in a systematic manner the differences in teaching philosophy lead to differences in what faculty do in all areas of their activities: teaching, research, and service.Academic staff, Case studies, Educational philosophy, Lectures, Teaching

Mathematics and academic finance: the role of paradigms

Purpose – Any adequate analysis of the nature of mathematics and its role in sciences necessarily requires fundamental understanding of the world views underlying the views expressed with respect to the nature and role of mathematics. Aims to discuss four general views with respect to mathematics and its role in sciences, corresponding to four broad worldviews. Design/methodology/approach – This paper starts with the premise that any worldview can be positioned on a continuum formed by four basic paradigms: functionalist, interpretive, radical humanist, and radical structuralist. It looks at the current state of mainstream academic finance and notes that it is founded only on the functionalist paradigm. It argues that any view expressed with respect to the nature of mathematics and its role in sciences is based on one of the four paradigms or worldviews. Findings – Emphasizes that the four views expressed are equally scientific and informative; they look at the nature and role of mathematics from a certain paradigmatic viewpoint. Originality/value – Concludes that there are opportunities for mainstream academic finance to benefit from contributions coming from the other three paradigms, if it respects paradigm diversity.Finance, Mathematics, Philosophy

On the theory and practice of finance

The purpose of this paper is to provide an explanation for the way the reality in the world of finance comes to be formed, among other things, by the theory of finance. It is based on the idea that financial behavior is not independent of the theory of finance. The paper, therefore, examines certain aspects of the academic field of finance. That is, it examines theories, PhD programs, journals, and conferences in academic finance. It notes that they adhere, almost exclusively, to a certain worldview, called the functionalist paradigm. Then, the paper discusses the role of finance graduates as employees of universities, corporations, and financial institutions in the practice of finance. In this way, the paper provides an explanation for the social construction of the world of finance.Business studies, Doctorates, Economic processes, Finance, Globalization, Professional associations