Financial markets anomalies: a research review from the perspective of rational and irrational arguments

Abstract

The purpose of this paper is to analyze, through a theoretical synthesis, the various arguments provided by the financial literature in order to comprehend the nature of the irregularities observed in financial centers that contradict the Efficient Market Hypothesis (EMH). Our findings reveal differences of opinion regarding the nature of these anomalies; however, two groups of arguments can be identified. The first group concerns the rational explanations embraced by the proponents of the efficiency hypothesis, while the second group of arguments relates to the insights of behavioral finance, which support the notion of irrational behavior in order to explain the divergence of financial market dynamics from the rationality predicted by traditional finance.