Can physics principles unlock new insights into financial markets? This review explores the burgeoning field of applying physics methodologies to financial research. Within just five years, this interdisciplinary approach has already yielded significant contributions across four key areas: empirical statistical properties of prices, random-process models for price dynamics, agent-based modeling, and practical applications. The article synthesizes these developments, showcasing how physicists are providing fresh perspectives on complex financial phenomena. This review highlights the exciting potential of cross-disciplinary research to advance our understanding of financial systems. Further research could explore the limitations of physics-based models in capturing the complexities of human behavior and market psychology.
Published in the International Journal of Theoretical and Applied Finance, this review aligns perfectly with the journal's focus on rigorous, quantitative analyses of financial markets. By synthesizing recent contributions from physicists, this work provides valuable insights and contributes to the ongoing evolution of financial modeling. It provides a valuable overview for researchers and practitioners interested in applying interdisciplinary approaches to the study of finance.