Ricerc@Sapienza

This paper aims at verifying whenever the Benford’s Law is valid in the context of global stock markets, which are here viewed as complex systems. In so doing, we pursue the scope of assessing the presence of data regularities and interpret obtained discrepancies. Specifically, we check the reliability of Benford’s Law for all the indexes listed on the stock exchanges of several countries, with a particular reference to prices and volumes of stocks.

The book offers an interdisciplinary perspective on finance, with a special focus on stock markets. It presents new methodologies for analyzing stock markets’ behavior and discusses theories and methods of finance from different angles, such as the mathematical, physical and philosophical ones. The book, which aims at philosophers and economists alike, represents a rare yet important attempt to unify the externalist with the internalist conceptions of finance.

The nature of the data of financial systems raises several theoretical and methodological issues, which not only impact finance, but have also philosophical and methodological implications, viz. on the very notion of data. In this paper I will examine several features of financial data, especially stock markets data: these features pose serious challenges to the interpretation and employment of stock markets data, weakening the ‘myth of data’. In particular I will focus on two issues: (1) the way data are produced and shared, and (2) the way data are processed.

The view from outside on finance maintains that we can make sense of, and profit from, stock markets’ behavior, or at least few crucial properties of it, by crunching numbers and looking for patterns and regularities in certain sets of data. The basic idea is that there are general properties and behavior of stock markets that can be detected and studied through mathematical lens, and they do not depend so much on contextual or domain-specific factors.

The view from inside maintains that not only to study and understand, but also to profit from financial markets, it is necessary to get as much knowledge as possible about their internal ‘structure’ and machinery. This view maintains that in order to solve the problems posed by finance, or at least a large part of them, we need first of all a qualitative analysis. Rules, laws, institutions, regulators, the behavior and the psychology of traders and investors are the key elements to the understanding of finance, and stock markets in particular.