How should literature review be started for creating a research proposal in finance area

 Starting a literature review for a research proposal in the finance area requires a structured approach tailored to the field’s data-driven and theory-intensive nature. Here’s how to begin:

1. Define the Scope of Your Study

  • Clearly articulate your research problem or question (e.g., What is the impact of ESG investments on portfolio performance?).
  • Identify the key areas of finance it touches (e.g., corporate finance, investment analysis, behavioral finance, or fintech).

2. Identify Core Concepts and Keywords

  • Break your research problem into finance-specific themes or variables.
    • Example: For ESG investments, keywords could be "sustainable investing," "green bonds," "portfolio optimization," and "risk-adjusted returns."
  • Use synonyms and related terms to enhance the breadth of your search.

3. Search for Foundational Literature

  • Begin with seminal works and theoretical foundations in your topic area.
    • Example: For portfolio theory, look into Markowitz’s Modern Portfolio Theory.
  • Identify key models or frameworks (e.g., CAPM, Black-Scholes, or behavioral finance theories).

4. Explore Academic and Professional Sources

  • Use finance-focused databases:
    • Academic: Scopus, Web of Science, JSTOR, SSRN (Social Science Research Network).
    • Professional: Bloomberg, Reuters, CFA Institute, and working papers from the NBER.
  • Look for peer-reviewed journals in finance:
    • Examples: Journal of Finance, Financial Management, Journal of Financial Economics.

5. Start with a Contextual Overview

  • Introduce the broad finance context relevant to your study.
    • Example: "Sustainable finance has emerged as a critical area in financial research, reflecting the growing importance of environmental and social governance (ESG) criteria."

6. Focus on Theoretical Frameworks

  • Identify and discuss key theories/models applicable to your study:
    • Example: "The Efficient Market Hypothesis (EMH) provides a foundation for understanding how ESG information may be priced into securities."

7. Highlight Trends in Recent Research

  • Discuss recent studies, focusing on:
    • Methodologies (e.g., empirical analysis, simulations).
    • Key findings (e.g., performance metrics, risk considerations).
    • Example: "Recent studies indicate that ESG-focused portfolios may achieve risk-adjusted returns comparable to traditional portfolios, particularly during market downturns."

8. Identify Research Gaps

  • Critically assess the literature to uncover gaps:
    • Example: "While ESG performance has been extensively studied in developed markets, limited research explores its impact on emerging market portfolios."

9. Justify Your Research

  • Use the identified gaps to establish the need for your study:
    • Example: "This study seeks to address the gap by examining ESG portfolio performance in emerging markets, focusing on risk-adjusted returns and diversification benefits."

10. Organize the Literature Review

  • Structure it logically:
    1. Introduction: Set the context and explain the importance of your research.
    2. Theoretical Background: Summarize key theories/models.
    3. Current Trends and Empirical Studies: Review recent findings and methodologies.
    4. Research Gaps and Contribution: Highlight what’s missing and position your research.

11. Maintain Academic Rigor

  • Use proper citation practices (e.g., APA, Harvard, or Chicago style).
  • Ensure a balance between older, foundational work and recent advancements in finance.

By starting this way, your literature review will lay a strong foundation for a compelling research proposal in finance.

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