Journal of Finance and Investment Analysis

Financial Markets, Efficiency, and Credit Intermediation

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• Abstract

   

  Research and teaching in financial economics very often assumes that the efficient market hypothesis is verified. Nonetheless, financial markets are still very far from reaching substantial levels of efficiency. Moreover, different perspective of market efficiency can be subsumed. In this paper, we provide a clearcut taxonomy of the different nuances of financial markets efficiency, useful for economic research and teaching. We also argue that scholars should necessarily disclose in advance the perspective of market efficiency assumed for the research analysis or teaching purposes and discuss the limitations in the inference that can derive.

   

  JEL classification numbers: G14, G10.

  Keywords: Financial markets, Market efficiency, Efficient market hypothesis, EMH.