Trends in Financial Innovation and Their Welfare Impact: An Overview

22 Pages Posted: 23 Aug 2012  

Franklin Allen

University of Pennsylvania - Finance Department; European Corporate Governance Institute (ECGI)

Multiple version iconThere are 3 versions of this paper

Date Written: September 2012

Abstract

There is evidence that financial innovations are sometimes undertaken to create complexity and exploit the purchaser. Thus financial innovation does have a dark side. As far as the financial crisis is concerned, securitisation and subprime mortgages may have exacerbated the problem. However, financial crises have occurred in a very wide range of circumstances, where these and other innovations were not important. There is evidence that financial liberalisation has been more of a problem. There are many financial innovations that have had a significant positive effect including venture capital and leveraged buyouts and innovations to fund environmental and health improvements.

Keywords: dark side, financial crises, private equity

JEL Classification: G18, G20, G24

Suggested Citation

Allen, Franklin, Trends in Financial Innovation and Their Welfare Impact: An Overview (September 2012). European Financial Management, Vol. 18, Issue 4, pp. 493-514, 2012. Available at SSRN: https://ssrn.com/abstract=2134715 or http://dx.doi.org/10.1111/j.1468-036X.2012.00658.x

Franklin Allen (Contact Author)

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States
215-898-3629 (Phone)
215-573-2207 (Fax)

HOME PAGE: http://finance.wharton.upenn.edu/~allenf/

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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