Finance and literature: not obvious bedfellows

Book review: The Wisdom of FinanceMihir Desai's look at the relationship between bankers and writers is a fascinating romp through history.


Working Girl has lessons for financiers
(Image credit: Copyright (c) 1988 Rex Features. No use without permission.)

The Wisdomof Finance:

Discovering Humanity in the World of Risk and Return

by Mihir Desai Published by Profile Books, £12.99 (Available from 31 August)(Buy at Amazon)

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Finance and literature aren't the most obvious bedfellows. Many writers see the City and Wall Street as a more sophisticated form of organised crime. For their part, many bankers dismiss literature and the humanities as having little practical value. Professor Mihir Desai of Harvard Business School begs to differ. Both provide valuable insights into human behaviour and they have a lot to teach each other. His book tries to explain finance using selected examples from literature and the humanities, and vice versa.

The book covers seven areas: risk, valuation, corporate governance, mergers, leverage, bankruptcy and the value of finance. Each chapter uses a wide variety of examples to illustrate the topic. His section on mergers, for example, draws on everything from the 1988 film Working Girl to the marriage market of medieval Florence, via the songs of Ray Charles and Kayne West. He talks about mergers that worked, such as the famous GM-Fisher deal, and those that didn't, such as the notorious AOL-Time Warner merger, as well as those that were close but never quite formalised, such as Ford and Firestone.

The result is a fascinating romp through history and Desai is to be commended for finding fresh examples away from the obvious reference points, with both Wall Street and The Wolf of Wall Street getting only brief mentions.

The book is very short and is focused on finance in general, so you are unlikely to find much specific advice about investing, though his discussion of why some mergers succeed and others fail may be useful for those thinking about buying or selling shares in companies undergoing this process. Desai also has a tendency to drift off on extended tangents. However, even if it is imperfectly executed at times, the idea is highly original.

What the press said

This is unlike any business book you've ever read, says Steve Denning for Forbes. Desai explains financial concepts in simple terms and "shows how they apply to every aspect of our lives". "Let us hope that it will inspire bankers and we'll see more copies of Jane Austen and Willa Cather on bank trading floors" says Gillian Tett in the Financial Times.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri