Financial Innovation (Frontiers of Finance Translation Series)

Author: Philip Molynux et al
Publisher:
Publish Date: 2003-07-18
Features: This book is based on Schumpeter's innovation theory, which emphasizes the process rather than just the correspondence between initial conditions and outcomes. In the financial industry, environmental factors such as regulation and technology trigger initial innovations, but this does not represent all financial innovations. Financial institutions also engage in innovation through mutual competition, where factors like the size, quantity, asset portfolio, and risk management of financial institutions all play active or passive roles in innovation activities. Through theoretical and empirical research, this book comprehensively discusses the innovation and diffusion processes of new financial instruments. It develops theoretical models for the innovation and diffusion of new financial products and conducts empirical validation of the models. This is the pioneering work to systematically study the financial innovation process to date. Over the past two decades, new financial instruments have made significant progress, most of which are off-balance-sheet activities. These instruments have become increasingly complex, placing higher demands on both buyers and creators. If people do not fully understand these instruments, they face risks and pay corresponding costs—a phenomenon well-known to all. Through theoretical and empirical research, this book comprehensively discusses the innovation and diffusion processes of new financial instruments. The book links theoretical analysis with current practical innovations, develops theoretical models for the innovation and diffusion of new financial products, and conducts empirical validation of the models.