The Development and Evolution of Financial Theory

The development of financial theory has undergone three phases,namely the early finance derived from classical economics,the modern finance established in the framework of neoclassical economics,and the new financial economics currently being explored and represented by new institutional finance and behavioral finance.Based-on-the-perspective-of-financial functions,especially transferring and configuring risks,it is beneficial to grasp the fundamental logic of financial theory evolution.It can be predict ed that the future development of finance will make constant improvements among the complementary of modern financial theory,new institutional finance and behavioral finance.In practice,establishing a risk management as the core concept of financial functions and setting up the strategic position of capital markets are key factors for China's future financial reform and development.