ARHIVELE OLTENIEI - Universitatea din Craiova

Behavioural Finances and Their Influences on Financial Markets 345development of the market, which is the effect of a anonymous mass of people,generally irrational. Why do we think, while the financial markets are developingin the last years, they do it in an irrational way? An explanation could be that theirrational behaviour is present when the prices grow or lower in a very short periodof time. These movements of prices show us that there is no economicalexplanation for them. The irrationality of the financial markets is the singleexplanation for what is going on. But when the prices grow or lower in a very longperiod of time there will be no irrational behaviour. Therefore, the participants actirrationally when the rumours are amplified and this happens when the prices growor lower in a very short period of time.Other hypothesis is that the participants have an irrational behaviour, and thenthe financial market became inefficient. But, it is not the case. Rationality refers toparticular cases, while on an efficient market spontaneity and the understanding ofall relevant information is reflected in share’s prices. Does the market becameinefficient if a specific number of participants would have an irrational behaviour,like it happens in financial babble between 1998 and 2000, because that kind ofbabble could be developed in the first situation? Not necessarily.Normally every participant follow his own interest and in concordancewith other participants’ activity. Even a share can be bought with a big price,which not necessarily means that this action is not rational if the prices isgrowing further and another participant would buy the share. From thisperspective, we can see that the babble on the financial markets can appearwithout any irrational behaviour of the participants. Maybe, they are consciousthat there is a potential benefit and a potential loss in the same time, while afinancial babble is growing. Anyway, they say nothing about the rationality ofan activity. The assumption of an activity with an big risk degree it is notnecessarily an irrational move.Another interesting phenomenon that classic theory of finance hasexplained with difficulty is the big transactional volume on the share markets.Excessive transactional volumes are explained through the concept of proceduralrationality. Then, after the raising of some news with a big degree of information(as the growth of a corporation or bank’s decision to grow the rate of interest)we see the growth of the transactional volumes. Obviously, participant on themarkets look for the interpretation of the information that they receive andevaluate them.■ Neoclassic finances versus behavioural finances – instruments forfinancial innovation.The revolution of behavioural finances from last decades is described wellas a recursion to an eclectic approach of the financial pattern making. Earlyrevolution of the neoclassic finances, which has reconfigured financialprofession in ’60 and ’70, had represented the enthusiasm of a single pattern.Liberated from the tyranny of a single pattern, the research from financialdomain develops quickly and these progresses could bring considerable material