New Horizons in Money and Finance series
Edited by Luisa Anderloni, David T. Llewellyn and Reinhard H. Schmidt
2. Is ﬁnancial innovation still a relevant issue? Luisa Anderloni and Paola Bongini INTRODUCTION 1 Financial innovation has regularly been regarded as one of the major drivers for the radical changes underwent by international and domestic ﬁnancial markets in particular during the 1980s and 1990s. The approach adopted in the literature on ﬁnancial innovation has typically focused on: (i) the concept of innovation, its features and forms; (ii) the determinants of ﬁnancial innovation; and (iii) the eﬀects generated by innovation. The term ‘ﬁnancial innovation’ has a broad range of both implicit and explicit deﬁnitions. Roger (1995, p. 11) deﬁnes ‘innovation’ as ‘an idea, practice, or object that is perceived as new by an individual or other unit of adoption. It matters little, so far as human behavior is concerned, whether or not an idea is objectively new as measured by the lapse of time since its ﬁrst use or discovery. The perceived newness of the idea for the individuals determines his or her reaction to it. If the idea seems new to the individual, it is an innovation’. Speciﬁcally with regard to the ﬁnancial sector, Silber (1975, p. 1), in outlining the scope of his work, states: This book is devoted to studies of innovation in the ﬁnancial sector. It focuses on the innovation of new ﬁnancial instruments, institutions, markets, and practices. Innovation means change. It usually implies progress as well, although this need not always be the case. While most economists have reserved the term...
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