Working Paper: NBER ID: w3323
Authors: Frederic S. Mishkin
Abstract: This paper discusses recent developments in U.S. financial markets and provides an economic analysis of why various recent financial innovations have occurred. This will not only provide us with s better understanding of existing financial markets in the United States and why they have been undergoing so much change in recent years, but it also may provide us with clues as to where our financial system may be heading.
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 |
|---|---|
| Changes in economic conditions (N12) | Financial institutions innovate new products (G21) |
| Increased interest rate risk (E43) | Development of variable-rate financial products (G19) |
| Interest rate swaps (E43) | Reduction of interest rate risk for financial institutions (G21) |
| Increased volatility in interest rates (E43) | Growth of futures and options markets (G13) |
| Tax laws favoring debt (K34) | Increased corporate indebtedness (G32) |
| Increased competition (L13) | Increased corporate indebtedness (G32) |