Market Shaping as an Answer to Ambiguities

Isabelle Huault () and Hélène Rainelli-Le Montagner ()
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Hélène Rainelli-Le Montagner: GREGOR - Groupe de Recherche en Gestion des Organisations - UP1 - Université Paris 1 Panthéon-Sorbonne - IAE Paris - Sorbonne Business School
Authors registered in the RePEc Author Service: Helene Rainelli-Weiss

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Abstract: Building on Smith (1989), we describe the social processes surrounding a new financial OTC derivatives market, the market for credit derivatives. We show that in contradiction with more traditional derivatives, credit derivatives generate ambiguities of a cognitive and political nature. By conducting an in-depth longitudinal qualitative study from 1996 to 2004, we document the efforts made by the promoters of the market to alleviate these ambiguities and show how the amount of resources needed results in the leadership of the most powerful. We thus provide a socially based explanation for the concentration and lack of transparency of the market. Our research exemplifies the contradictions between the rhetorical justification of financial innovations provided by financial theory and the empirical realities of a modern derivative market. It suggests that the actual structure of the market might best be understood by paying attention to the way different cognitive and political communities react to these contradictions.

Keywords: Social studies of finance; social construction of value; financial innovation; OTC markets; cognitive and political ambiguities (search for similar items in EconPapers)
Date: 2009
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00340046v1
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Citations: View citations in EconPapers (12)

Published in Organization Studies, 2009, 30 (5), pp.549-575

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