Causal Modeling for Finance and Business: Foundations, Frameworks, and Applications

A comprehensive look at causality’s theoretical and practical aspects in economics and finance. Causal Modeling for Finance and Business presents causality’s theoretical and practical aspects in economics and finance.Frank Fabozzi and Sergio Focardi offer a foundation for understanding causal relationships and their importance in complex systems.Topics include the theory of graphs, probabilistic frameworks, structural causal models, algorithms for learning causal structures, and the empirical testing of these models. The book emphasizes applying and deploying causal models in real-world business and investment scenarios.However, it offers also a novel theoretical perspective on causal modeling.Causation is not a law of nature, but it is a characteristic of causal systems.If we accept the modern idea of causation as manipulability, causal systems are characterized by causal relationships as well as purely descriptive functional relationships. The book addresses a critical gap in underst