Storytelling and Structural Incoherence in Financial Markets

Abstract

This article presents a sociological–narrative approach to studying sensemaking and legitimation in financial markets, and applies this to the Istanbul Stock Exchange (ISE). The sociological–narrative approach taken here differs from standard economics and psychology theories on market behaviour and outcomes. It draws on the existing literature on sensemaking and legitimation in organizations and financial markets, and postulates that financial markets, as realms of meaning and practice, are prone to be structurally incoherent. The incoherence is argued to stem from positionality of market actors. By positionality, I refer to an actor’s position in division of labour in market organizations and to an investor’s place in market-specific investor classifications. These imply different epistemic resources at the disposal of different actors, and hence structural incoherence in meanings and practices in financial markets. The article demonstrates an example of this incoherence in the case of the ISE by looking at sensemaking and legitimation stories and practices of brokers, investment analysts, media figures and regulators in this market. JEL: Z13, D81, G10, G24