The (Re)Introduction of Modern Finance Ideas in France between the Mid-1970s and the Early 1980s and Its Paradoxes

Abstract

To date, the history of financial economics has not discussed in detail the international diffusion of financial economics (henceforth modern finance). Modern finance was supposedly “introduced” in France in the 1970s. According to some historians of financial economics, it is an American author—Leonard J. Savage— who allowed French authors to rediscover Louis Bachelier’s work, indicating that “a prophet is not without honor, save in his own country.” The present article challenges this conventional narrative and studies for the first time how modern finance ideas were disseminated in France between the mid-1970s and the early 1980s. It shows that, when modern finance ideas were “imported” from the United States in France in 1970s, some pioneering French contributions have been taught for almost a century. Based on this result, the article explains why the French authors who disseminated these ideas rarely referred to the works of French forerunners. It also clarifies the role of the French economists in this dissemination. All of this suggests that the “import” of modern financial ideas in France from the US was in fact a reintroduction. By exploring the international dissemination of modern finance ideas in France, this article provides the opportunity to investigate several new questions in the study of the history of financial economics.