The Council for European Studies (CES, Columbia University), which supports the multidisciplinary study of Europe, held its 16th International Conference last Saturday in Chicago.  A panel on ‘New Perspective in Economic Culture’ organized by Karin Knorr-Cetina and Erica Coslor featured four papers, all dealing with finance related topics.


Karen Hunt Ahmed (professor of finance, DePaul University) discussed Islamic finance as a cultural industry that innovates Sharia compliant ways of structuring financial products and transactions.  Hunt Ahmed pointed to the central importance of Sharia Standards Boards as the institutional underpinning of Islamic finance.  She argues that because there are so few professional with the specialized training to serve on these boards, an important challenge to the rising demands for Sharia compliant products (particularly as these become considered a class of ‘socially responsible investments’) will be the industry’s ability to manage the circulation and supply of Sharia expertise.


Erica Coslor (graduate student, UChicago) presented a paper describing the emergence of price indexes and specialized art investment funds.  Instead of looking at simple price books, art investors now have access to complex pricing indicators which allow them to compare the return-on-investment they can expect from art as compared to other investment vehicles.  While the emergence of such instruments lowers the information costs necessary to participating in the art market and make art investment accessible to people who are not collectors, Coslor cautions that that average investors will still have access much less information on the quality of the pieces than industry experts.


Rachel Harvey (graduate student, UChicago) has traced the history of the ‘gold fix’ in the U.K.  Gold fixing began as a financial activity during which several banks would regularly meet to set a public price of gold.  Harvey traces the ritual’s gradual detachment from the markets, as it ceased to be the moment when an actual trading benchmark was produced, and evolved a general international indicator of the health of the financial system and as symbolic support for the pound sterling.  By 1960, she argues, gold fixing has become an ‘invented tradition’, a cultural product of the London Gold Market preserved for its symbolic importance rather than for any practical role in price setting. 

Martha Poon (graduate student, UCSD) presented a paper on the transition in U.S. mortgage finance from a market dominated by simple low-risk securities issued by government sponsored enterprises (GSEs), to a market for structured high-risk securities issued by private label lenders and evaluated by the ratings agencies.  In 1995, in the transition to automated underwriting systems, the GSEs issued key interpretations of commercially available credit risk scores as means of assessing the creditworthiness of individuals.  Poon argues that in diffusing throughout the industry, these interpretations reconstituted the ‘prime’ / ‘subprime’ split in home loan lending. 

The discussant for this panel was Ryon Lancaster (professor, UChicago).