Technological Change, Financial Innovation, and Diffusion in Banking

Frame, W. Scott; White, Lawrence J.

doi:10.2139/ssrn.1434235

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Technological Change, Financial Innovation, and Diffusion in Banking

Federal Reserve Bank of Atlanta Working Paper 2009-10

33 Pages Posted: 16 Jul 2009

See all articles by W. Scott Frame

Lawrence J. White

Stern School of Business, New York University; New York University (NYU) - Leonard N. Stern School of Business, Department of Economics

There are 3 versions of this paper

Date Written: March 2009

Abstract

This paper discusses the technological change and financial innovation that commercial banking has experienced during the past twenty-five years. The paper first describes the role of the financial system in economies and how technological change and financial innovation can improve social welfare. We then survey the literature relating to several specific financial innovations, which we define as new products or services, production processes, or organizational forms. We find that the past quarter century has been a period of substantial change in terms of banking products, services, and production technologies. Moreover, while much effort has been devoted to understanding the characteristics of users and adopters of financial innovations and the attendant welfare implications, we still know little about how and why financial innovations are initially developed.

Keywords: technological change, financial innovation, banking

JEL Classification: G21, O31, O33

Suggested Citation: Suggested Citation

Frame, W. Scott and White, Lawrence J. and White, Lawrence J., Technological Change, Financial Innovation, and Diffusion in Banking (March 2009). Federal Reserve Bank of Atlanta Working Paper 2009-10, Available at SSRN: https://ssrn.com/abstract=1434235 or http://dx.doi.org/10.2139/ssrn.1434235