A Critical Survey on Efficient Market Hypothesis (EMH), Adaptive Market Hypothesis (AMH) and Fractal Markets Hypothesis (FMH) Considering Their Implication on Stock Markets Behavior

Cristi Spulbar (), Ramona Birau () and Lucian Florin Spulbar ()
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Ramona Birau: University of Craiova
Lucian Florin Spulbar: University of Craiova

Ovidius University Annals, Economic Sciences Series, 2021, vol. XXI, issue 2, 1161-1165

Abstract: The fundamental objective of our research study is to provide a critical analysis on Efficient Market Hypothesis (EMH), Adaptive Market Hypothesis (AMH) and Fractal Markets Hypothesis (FMH) considering their impact on stock markets behavior. Efficient Market Hypothesis is one of the pillars of modern finance and it is built on the paradigm that any publicly information can be considered as available for all financial investors, stock market participants or other actors in financial markets, and consequently asset prices always integrate and reflect all relevant information. Adaptive Market Hypothesis is based is a more recent theory whose theoretical architecture includes evolutionary principles. On the other hand, the Fractal Market Hypothesis is focused on the concept of the stock market liquidity, considering the fact that Efficient Market Hypothesis completely ignores this major aspect. Moreover, a liquid stock market represents a stable market which has significant implications at the investment level. Past financial evidence has shown that short-term price changes exhibit the obvious tendency to be more volatile compared to longterm price trends.

Keywords: Efficient Market Hypothesis (EMH); Adaptive Market Hypothesis (AMH); Fractal Markets Hypothesis (FMH); stock market; Random Walk Hypothesis (RWH); chaos theory (search for similar items in EconPapers)
JEL-codes: D53 E44 G1 G4 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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