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Financial Innovation and the Management and Regulation of Financial Institutions
Merton, Robert C. - 2014
New security designs, improvements in computer telecommunications technology and advances in the theory of finance have led to revolutionary changes in the structure of financial markets and institutions. This paper provides a functional perspective on the dynamics of institutional change and...
Persistent link: https://www.econbiz.de/10012752889
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Security Baskets and Index-Linked Securities
Gorton, Gary B. - 2010
Security baskets and index-lined securities are securities whose values are functions of the cash flows or values of other assets. Creation of these "composite" securities would seem to be redundant since investors can cost1ess1y replicate them. In this paper we study the existence and optimal...
Persistent link: https://www.econbiz.de/10013138948
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Speculation and Risk Sharing with New Financial Assets
Simsek, Alp - 2011
While the traditional view of financial innovation emphasizes the risk sharing role of new financial assets, belief disagreements about these assets naturally lead to speculation, which represents a powerful economic force in the opposite direction. This paper investigates the effect of...
Persistent link: https://www.econbiz.de/10013119601
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Measuring Money Growth When Financial Markets are Changing
Stock, James H. - 2011
This paper examines the problem of measuring the growth of a monetary aggregate in the presence of innovations in financial markets and changes in the relationship between individual assets and output. We propose constructing a monetary aggregate so that it is a good leading indicator of nominal...
Persistent link: https://www.econbiz.de/10013125265
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Durable Financial Regulation : Monitoring Financial Instruments as a Counterpart to Regulating Financial Institutions
Nakamura, Leonard I. - 2011
This paper sets forth a discussion framework for the information requirements of systemic financial regulation. It specifically describes a potentially large macro-micro database for the U.S. based on an extended version of the Flow of Funds. I argue that such a database would have been of...
Persistent link: https://www.econbiz.de/10013125587
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Macro-Prudential Policy in a Fisherian Model of Financial Innovation
Bianchi, Javier - 2012
The interaction between credit frictions, financial innovation, and a switch from optimistic to pessimistic beliefs played a central role in the 2008 financial crisis. This paper develops a quantitative general equilibrium framework in which this interaction drives the financial amplification...
Persistent link: https://www.econbiz.de/10013106662
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The Consequences of Financial Innovation : A Counterfactual Research Agenda
Lerner, Josh - 2014
Financial innovation has been both praised as the engine of growth of society and castigated for being the source of the weakness of the economy. In this paper, we review the literature on financial innovation and highlight the similarities and differences between financial innovation and other...
Persistent link: https://www.econbiz.de/10013068604
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Financial Innovation and Endogenous Growth
Michalopoulos, Stelios - 2014
Is financial innovation necessary for sustaining economic growth? To address this question, we build a Schumpeterian model in which entrepreneurs earn profits by inventing better goods and profit-maximizing financiers arise to screen entrepreneurs. The model has two novel features. First,...
Persistent link: https://www.econbiz.de/10013070763
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What Explains House Price Booms? : History and Empirical Evidence
Bordo, Michael D. - 2013
In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit with … that can be interpreted as loose monetary policy shocks, low inflation shocks, bank credit shocks and house price shocks … during boom periods there is a heightened impact of all three "policy" shocks with the bank credit shock playing an important …
Persistent link: https://www.econbiz.de/10013073938
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Financial Crises and Liquidity Shocks : A Bank-Run Perspective
Calvo, Guillermo A. - 2010
bonanza and turmoil are driven by financial innovation and collapse in line with the "bank run" literature of the Diamond …
Persistent link: https://www.econbiz.de/10013150555