Essence and Theoretical Approaches to the Interpretation of Efficiency of the Financial Market

Abstract

The issue of financial market efficiency remains little studied, but relevant in modern economic conditions for the development of the financial, especially stock, market. The aim of the article is to study the theoretical aspects of the essence of financial market efficiency, in particular, the hypothesis of an effective market, from the perspective of defining the concept of financial market efficiency, its main criteria and impact parameters. The methodological basis of the study consists of general scientific principles and methods of conducting scientific research, the provisions of economic science, set forth in the works of leading foreign and national scientists. The following methods have been applied in the work: analysis and generalization of national experience of existing provisions and approaches, theoretical and methodological foundations for determining the essence of an effective market, the influence of macroeconomic, political, information levers on its condition. The scientific novelty of the study is to substantiate the theoretical and methodological foundations of the effectiveness of the financial market. The practical significance of the results lies in the fact that the main theoretical and methodological provisions and conclusions can provide a theoretical and applied basis for improving the methodology of developing geo-economic levers for the functioning and regulation of the financial markets of developing countries reformation. The basis for determining the effectiveness of the financial market remains the hypothesis of an effective market. Although the provisions of this hypothesis are not confirmed during periods of crisis, it remains relevant in modern theories of market efficiency. According to the hypothesis of the effectiveness of financial markets, the prices of financial instruments at any given time reflect all available market information, including forecasted information, however, forecasting the price of financial instruments for the following periods is erroneous and excludes investors from earning super-profits. However, a number of opponents determine the significance of other factors influencing the market value of securities, as their real value may not correspond at all. The prospect of further research is the development of information sources and methods of investor awareness, add opportunities for decision-making active or passive games in the financial markets

Keywords

• effective market hypothesis
• forms of market efficiency
• insiders
• stock indices
• stock information
• economic development
• financial crisis
• rational behavior
• irrational behavior
• stock investors