The scientific breakthrough in financial modeling was shaped by an extraordinary flow of financial innovation that coincided with revolutionary changes in the world financial market and institutions. As the global financial market is integrated, financial modeling has become more complex in this uncertain environment, requiring higher analytical expertise. In such situation, the term Financial Economics emerged into fashion.
The confluence of the two disciplines, economics and finance, is frequently termed as Financial Economics (JEL: G) to describe the application of general micro economic theory to the special problems encountered in finance. Whenever, decision making in uncertainty is required, we need some scientific way out. Financial Economics paves the way for decision making under uncertainty in the context of the financial markets, and the resultant economic and financial models and principles. The prime concerns of Financial Economics can be bifurcated as asset pricing/ investment theory and corporate finance; prospective provider of the capital and optimizer of the capital respectively. This book is an endeavour to touch the applicative aspects of financial economics in India scenario, as Indian financial market is no more isolated after the liberalisation efforts of 1992.
Sustainability issues are not only affairs of ecological economics but are concerns of financial economics too. In a broader context, social, environmental and economic demands are considered the three pillars of sustainability. In corporate environment; they are often referred to as the triple bottom line – a process by which companies manage their financial, social and environmental risks, obligations and opportunities. Financial institutions can strengthen their portfolio by systematically evaluating environmental and social risks of lending and investing activities in order to minimize financial liabilities and reputational risks arising out of environmental and social issues. It is opined that the expenditure upon sustainability issues is in fact an investment.
This volume is a humble effort of the editors to deal with the issue of finance and sustainability at one place. In all, the book comprises of 16 papers authored by scholars, academicians and professionals across the country. Minor modification has been done with the paper whenever required. Efforts have been made to follow the standard academic research report writing practice. APA fashion (6th edition) has been adopted as citation and referencing style. We hope that this volume will match with the academic standards and serve as literary motivation for further research.
Shri Narayan Pandey
Gautam Pratap Pradhan