Financial Innovation and the Management and Regulation of Financial Institutions
Robert C. Merton
MIT Sloan School of Management; National Bureau of Economic Research (NBER); Harvard Business School - Finance Unit
NBER Working Paper No. w5096
New security designs, improvements in computer telecommunications technology and advances in the theory of finance have led to revolutionary changes in the structure of financial markets and institutions. This paper provides a functional perspective on the dynamics of institutional change and uses a series of examples to illustrate the breadth and depth of institutional change that is likely to occur. These examples emphasize the role of hedging versus equity capital in managing risk, the need for risk accounting and changes in methods for implementing both regulatory and stabilization public policy.
Number of Pages in PDF File: 46working papers series
Date posted: August 29, 2000
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