Fibonacci and the Financial Revolution
NBER Working Paper No. 10352
This paper examines the contribution of Leonardo of Pisa [Fibonacci] to the history of financial mathematics. Evidence in Leonardo's Liber Abaci (1202) suggests that he was the first to develop present value analysis for comparing the economic value of alternative contractual cash flows. He also developed a general method for expressing investment returns, and solved a wide range of complex interest rate problems. The paper argues that his advances in the mathematics of finance were stimulated by the commercial revolution in the Mediterranean during his lifetime, and in turn, his discoveries significantly influenced the evolution of capitalist enterprise and public finance in Europe in the centuries that followed. Fibonacci's discount rates were more culturally influential than his famous series.
Published: Goetzmann, William N. and K. Geert Rouwenhorst (eds.) The Origins of Value: The Financial Innovations That Created Modern Capital Markets. Oxford and New York: Oxford University Press, 2005.