Reflections on the evolution of modern financial science

Financial science or financial economics, as a sub-discipline in economics, has recorded a remarkable progress during the past fifty years. Finance deals with allocation of various assets and liabilities in the long run within uncertain conditions. Hence, the study of finance involves inquiring, explaining and predicting a diverse and growing number of financial instruments, institutions, and markets, as well as the relationship of their behavior to other economic variables. The study of finance has, therefore, become a study of human civilizations, progress, and even crises. This essay traces the key milestones of the evolution of financial science evaluating the path-breaking contributions to economic science made during a few decades. It attempts to highlight how the study of finance is useful in understanding and predicting human behavior as financial science has generated an extremely rich and rigorous body of theoretical, methodological and empirical knowledge which has increasingly become influential on the thought process of mainstream economics.