Working Paper: NBER ID: w2277
Authors: Richard M. Levich
Abstract: The central theme of this paper is that financial innovation has become a major force effecting the United States and other developed economies. The common features of the process include product innovation, securitization, liberalization of domestic financial market practices, globalization of markets, and increased competition among financial institutions. The paper offers a review of the product and process changes that have occurred in international financial markets, an analysis of the factors leading to these changes, and an examination of the implications for both financial market participants and macroeconomic policy makers.
Keywords: No keywords provided
JEL Codes: No JEL codes provided
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Financial innovations (G29) | changes in financial market practices (G18) |
| The introduction of new financial products (G19) | reliance on traditional credit instruments (G21) |
| Financial innovations (G29) | changes in macroeconomic policies (E65) |
| Financial innovations (G29) | market structure changes (D49) |
| Securitization and market-determined interest rates (E43) | reliance on traditional bank loans (G21) |
| Financial innovations (G29) | macroeconomic allocational efficiency (D61) |
| Financial innovations (G29) | negative externalities on society (D62) |