THE IMPLICATIONS OF CHAOS THEORY ON BUCHAREST STOCK EXCHANGE
THE IMPLICATIONS OF CHAOS THEORY ON BUCHAREST STOCK EXCHANGE

Summary/Abstract: Chaos theory has generated a conceptual revolution regarding the analysis of capital markets. In general, capital market is an exciting and suitable field to apply chaos theory. Through its fundamental characteristics, an emerging capital market such as Bucharest Stock Exchange is even more appropriate. A chaotic system, as it is an emerging capital market presents certain characteristics such as : unpredictability, instability, disorder, noise and multiple vulnerabilities. By its very complex structure, an emerging capital market is a chaotic system. Chaos represents a state of complex, unpredictable, nonlinear dynamics. A chaotic system appears to be random when in fact is an evolved form of order. Chaos theory provides an explanation for the fact that complex and unpredictable results occur in dynamic systems behaviour due to seemingly insignificant changes in initial conditions.

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