Path Dependence and Market Dynamics in Financial Systems

EasyChair Preprint 15052

Abstract

Path dependence, a concept rooted in economics and systems theory, plays a pivotal role in understanding market dynamics in financial systems. It refers to how historical events, decisions, and patterns influence the current and future states of financial markets. In financial systems, path dependence explains why markets do not always converge to equilibrium and how early market conditions or shocks can have long-lasting effects on asset prices, trading behaviors, and economic outcomes. This abstract explores the implications of path dependence for market dynamics, focusing on its influence on market behavior, asset pricing, and investor decision-making. Path-dependent processes can lead to persistent volatility, price bubbles, and financial crises, as they reinforce feedback loops and self-reinforcing mechanisms within markets. For instance, in the context of stock market crashes or speculative bubbles, historical price movements shape investor expectations and future market trajectories.

Keyphrases: Adaptive mechanisms, Economic Pathways, Financial Innovation, Financial Systems, Institutional Frameworks, Investment Patterns, Market Behavior, Market Efficiency, Regulatory impact, behavioral economics, crisis management, economic evolution, economic transition, feedback loops, financial stability, historical contingency, historical trends, market dynamics, path dependence, systemic risk

@booklet{EasyChair:15052,
  author    = {Wayzman Kolawole},
  title     = {Path Dependence and Market Dynamics in Financial  Systems},
  howpublished = {EasyChair Preprint 15052},
  year      = {EasyChair, 2024}}