Technological Change, Financial Innovation, and Diffusion in Banking

37 Pages Posted: 16 Jan 2014

See all articles by W. Scott Frame

W. Scott Frame

Structured Finance Association

Lawrence J. White

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

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Date Written: January 2014

Abstract

The commercial banking business has changed dramatically over the past 30 years, due in large part to technological change. The paper first describes the role of the financial system in economies and how technological change and financial innovation can affect social welfare. We then survey the literature relating to several specific financial innovations – broadly categorized as new products or services, new production processes, or new organizational forms – and evaluate them in the context of the broader economics literature on innovation. 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, diffusion; banking

Suggested Citation

Frame, W. Scott and White, Lawrence J. and White, Lawrence J., Technological Change, Financial Innovation, and Diffusion in Banking (January 2014). NYU Working Paper No. 2451/33549, Available at SSRN: https://ssrn.com/abstract=2380060

W. Scott Frame (Contact Author)

Structured Finance Association ( email )

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Lawrence J. White

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

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Stern School of Business, New York University ( email )

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