When Physics Became Undisciplined An Essay on Econophysics

In the 1990s, physicists started looking beyond their disciplinary boundaries by using their methods to study various problems usually thrown up by financial economics. This dissertation deals with this extension of physics outside its disciplinary borders. It seeks to determine what sort of discipline econophysics is in relation to physics and to economics, how its emergence was made possible, and what sort of knowledge it produces. Using a variety of evidence including bibliometric analysis Chapter 1 explores the field’s disciplinary identity as a branch of physics even though its intellectual heart is better seen as the re-emergence of a 1960s research programme initiated in economics. Chapter 2 is historical: it identifies the key role played by the Santa Fe Institute and its pioneering complexity research in the shaping of methodological horizons of econophysics. These are in turn investigated in Chapter 3, which argues that there are in fact three methodological strands: statistical econophysics, bottom-up agent-based econophysics, and top-down agent-based econophysics. Viewed from a Lakatosian perspective they all share a conceptual hard-core but articulate the protective belt in distinctly different ways. The last and final chapter is devoted to the way econophysicists produce and justify their knowledge. It shows that econophysics operates by proposing empirically adequate analogies between physical and other systems in exactly the ways emphasised by Pierre Duhem. The contrast between such use of analogy in econophysics and modeling practices implemented by financial economics explains why econophysics remains so controversial to economists

Multi-Agent Spiral Software Engineering: A Lakatosian Approach

This paper presents an epistemological approach for the development and validation of an original agent oriented software development methodology (see [Wautelet05a, Wautelet05b]). Agent orientation has been widely presented as a new modeling, design and programming paradigm that could be adopted to build systems mark to the determinant advantages it offers. This will be exposed and put into perspective in the paper through the Lakatosian approach. Spiral development (see [Boehm00a]) has become popular, especially through object-oriented software project development since it allows efficient software project management, continuous organizational modeling and requirements acquisition, early implementation, continuous testing and modularity, etc. The iterative nature of this requirements engineering process will be studied here through Herbert Simon's bounded rationality principle and Popper's knowledge growth principle but nuanced by Lakatos falsification principle criticism

Making sense of failure to support experimental innovation: a case study of a financial services information system

Experiments have been somehow neglected in innovation literature. In this paper, we propose the analysis of a case of an IT project, which was constructed as an experiment and it was built as a reaction to the failure of developing a system based on the conventional modes. We use the theory of sense-making and sense-giving in analysing historical documents to demonstrate that making sense of failure can lead to the success of an experiment. Thus, failure can be re-imagined as an experiment that can lead to success through a sense-making process

Economic Policy Uncertainty and Entrepreneurship: A Bad for a Good?

The study examines the influences of the global/domestic economic policy uncertainty (EPU) on entrepreneurship in a sample of 23 economies over the period 2006-2016. Employing the two-step system general method of moment (GMM) estimation for unbalanced panel data, our study provides surprising evidence indicating that EPU may not always be harmful to entrepreneurship. Precisely, in contrast with existing literature emphasizing the negative impact of the uncertainty on entrepreneurship, our article suggests that EPU seems to boost pro-entrepreneurial social and cultural norms (i.e., encouraging actions for creation of new businesses). As such, we suggest that uncertainty may serve as an exogenous shock filtering "good" business ventures from "not-so-good" ones

Conceptualising cybersecurity risk of fintech firms and banks sustainability

Traditional banks are replete with conventional financial mechanisms is being subjected to enormous pressure to minimise costs in a sustainable way. For instance, offering low-interest rates, which squeeze the overall margin. Due to the high demand for a tailored portfolio of products, the availability of sophisticated communication and advance transaction mechanisms lead to an emergence of new types of firms known as financial technology service (i.e., fintech). Recently, the collaboration between these fintech organisations and banks has increased to lessen the bureaucracy and provide fine-tuned service to the consumer. Albeit, such collaboration has increased the cybersecurity risk for both fintech firms and conventional banks. Prior research has scant to acknowledge the cybersecurity risk and the sustainability of these fintech-bank collaborations. Hence, the dilemma is whether the bank should pursue such collaboration to resuscitate the profit margin; or be pragmatic and shirk to eliminate sustainability risk. We propound that the cybersecurity risk is much higher after the collaboration happens in banks. Types of cybersecurity risks are highlighted, and a theoretical model has been developed. We propose that if both fintech and the conventional banks collaboratively abate these cybersecurity risks, then yielding the profitability is much convenient

The Ambivalent Role of Institutions in the CO2 Emissions: The Case of Emerging Countries

The CO2 emission is a very urgent theme for emerging economies that are currently producing 60% of the global emissions. Because these countries generally have a high economic growth, they usually face with environmental issues. This article investigates the relationship between the economic activity, and more precisely economic integration (trade openness and FDI inflow), on CO2 emissions by taking into consideration the potential role played by institutions. Through sys-GMM estimators, our analysis investigates a sample of 36 emerging economies on a period going from 2002 to 2015. Our major findings are the following: (i) the economic integration increases CO2 emissions, supporting the “pollution-haven” hypothesis for emerging economies; (ii) the improvement of institutional quality also increases CO2 emissions via the increase of economic activities it generates; (iii) more interestingly, the improvements of institutions can reduce the positive effect of FDI inflow and trade openness on CO2 emissions. We will explain this observation through the lens of the well-known Environmental Kuznets curve suggesting that an improvement of institutional quality goes hand in hand with financial and trade openness of emerging economies if these countries want to fight against global warming in the long term. Keywords: CO2 emissions, Economic integration, Environment, Institutions. JEL Classifications: E02, F15, Q56

Global Emissions: A New Contribution from the Shadow Economy

Based on the STIRPAT model and the EKC hypothesis, this study provides new evidences on the economic determinants of global emissions. The system-GMM estimations are used for the sample of 106 economies in the period of 1995-2012 to investigate the influences of income level, urbanization, industrialization, energy intensity, public expenditure, trade openness, FDI inflow, and especially shadow economy on total greenhouse emissions, CO2 emissions, CH4 emissions, and N2O emissions, respectively. This study contributes to the literature in three folds. First, the industrialization energy intensity are the main drivers for all emissions (excluding N2O). While, urbanization has positive effects on emissions excluding the case of CH4. Other drivers including public spending and economic integration (proxied by trade openness and FDI inflow) are also tested with interesting findings. Second, a higher level of shadow economy increases all emissions excluding CO2. Third, the determinants of emissions vary depending on the countries' income level. The study is supported by a battery of robustness checks and by various estimations in the short and long-run to identify the importance of emissions' drivers. Keywords: Emissions; CO2, CH4, N2O, Public expenditures, Economic integration, Shadow economy. JEL Classifications: F18, F64, O44, Q56, R11, O17 DOI: https://doi.org/10.32479/ijeep.724

Econophysics: A new challenge for financial economics?

Financial economics was born in the 1960s. It took less than two decades for the new discipline’s main theoretical results to become established, creating what is considered to be mainstream financial economics. Less than thirty years later, a new field of research called “econophysics” was created. This field aims to reinvent modern financial theory and, indirectly, financial economics. This article proposes to study, by an historical analysis, to what extent econophysics today could constitute one of the major theoretical challenges to financial economics. It shows how these two fields have historical similarities, and analyzes how these similarities call the future evolution of financial theory into question

Towards a transdisciplinary econophysics

This paper deals with the disciplinary dimension of a very new field called econophysics and shows that despite the fact that econophysics is regularly described as an interdisciplinary approach, it is in fact a multidisciplinary field. Beyond this observation, we note that recent developments suggest that econophysics could evolve towards a more integrated field. We therefore propose a prospective approach by analyzing how this field could become transdisciplinary. In this article, we focus on financial work, and we show that a common scheme is attainable and we investigate the possibilities of a trandisciplinary econophysics which will make possible to revisit the theoretical foundations of financial economics and develop new models and theories better suited to the management of financial risks and financial markets. The contribution of this article is twofold: on the one hand it clarifies the epistemological status of econophysics, and on the other, it studies the recent evolution of econophysics and shows how this field could evolve to become transdisciplinary

Breaking down the barriers between econophysics and financial economics

This article highlights the current misunderstanding between economists and econophysicists by adopting the financial economists’ viewpoint in order to explain why the works developed by econophysicists are not recognized in finance. Because both communities do not share the same scientific culture, and for the other reasons developed in the article, economists often consider econophysics as a strictly empirical field without theoretical justification. This paper shows the opposite; it also tries to facilitate the dialogue between econophysicists who often do not explain in details their theoretical roots and financial economists who are not familiar with statistical physics. Beyond this clarification, this paper also allows to identify what remains to be done for econophysicists to contribute significantly to financial economics: 1) development of a common framework\vocabulary in order to better compare and integrate the two approaches; 2) development of generative models explaining the emergence of power laws; and 3) development of statistical tests for the identification of such statistical regularities