The History of Finance

In: Business and Management

Submitted By tianzi
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The History of Finance

An eyewitness account.

Merton H. Miller

MERTON H. MILLER is Robert

R. McCormick distinguished ser-

vice professor emeritus at the

University of Chicago (IL 60637).

SUMMER 1999

* * * IT IS ILLEGAL TO REPRODUCE THIS ARTICLE IN ANY FORMAT * * *|

t five years, the German Finance Association A is not very old as professional societies go, but then neither is the field of finance itself.

Finance in its modern form really dates only from the 1950s. In the forty years since then, the field has come to surpass many, perhaps even most, of the more traditional fields of economics in terms of the numbers of students enrolled in finance courses, the numbers of faculty teaching finance courses, and above all in the quantity and quality of their combined schol-arly output.

The huge body of scholarly research in finance over the last forty years falls naturally into two main streams. And no, I don’t mean “asset pricing” and “cor-porate finance,” but instead a deeper division that cuts across both. The division I have in mind is the more fundamental one between what I will call the business school approach to finance and the economics department approach. Let me say immediately, however, that my distinction is purely “notional,” not physical — a dis-tinction over what the field is really all about, not where the offices of the faculty happen to be located.

In the United States, the vast majority of aca-demics in finance teach in business schools, not eco-nomics departments, and always have. At the same time, in the elite schools at least, a substantial fraction of the finance faculties have been trained in — that is, have received their Ph.D.s from —…...

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