The Academic Director of Master in Finance programs, Prof. Ignacio de la Torre, met with the finance professionals in Istanbul during a Master Class. Prof. de la Torre shared his research and analysis regarding the financial mistakes in history.

The economic crisis started in USA in 2008, is now affecting the Euro Zone; and European Union financial system is facing very difficult times. Prof. de la Torre gave examples of previous economic crisis in history including the Great Depression and World War II and discussed with the audience the reasons why this current economic crisis is perceived by the economists as deep as those times. Prof. de la Torre criticized how the economists made wrong forecasts by using the previous trends in economy. He stated that, Economists forecasted Soviet Union to be the biggest economy in 60’s; then Japan in 70’s, followed by Asian Tigers in 90’s by taking the previous growth rates as the main indicator. Now, the same mistake is done with China. Prof. de la Torre said that we should look for how the business people in the real business world perceive the economy and what their forecasts and investment decisions are. And also, we should consider the geographic, political, and sociological indicators in these areas. Therefore, he believed that PMI in Europe and ISM in USA are better indicators for forecasting the economies. Prof. de la Torre also added that the current financial crisis cannot be explained only with logic; human psychology also has a lot of contribution in the current situation; where behavioral finance should be also taken into account when we analyze the financial crisis.

Turkish Finance professionals shared their ideas and a good level of discussion took place. Media was also interested in the event and had interviews with Prof. de la Torre.

By Sevtap Bas