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Financial Institutions & Markets - Financial Innovation - Essay Example
Finance & Accounting
Pages 6 (1506 words)
FINANCIAL INSTITUITION AND MARKETS – FINACIAL INNOVATION Abstract This study entails about financial innovations and its effects. Financial innovations have resulted in the development of complex financial techniques and instruments. Technological advancement, globalization, deregulation, etc…
Individuals and business concerns now have a wider range of options with respect to different types of borrowing facilities available to them. However, the recent Global Financial Crisis (GFC) is argued to be the result of this financial innovation. As a result of that most of the monetary policy makers have tightened their regulatory policies and have imposed several restrictions on the financial institutions worldwide. Borrowers have become more sensitive towards interest rates fluctuations in the financial market and the world is experiencing a situation of credit crunch now. Hence it is required to have a reassessment of the monetary policies by different nations in the world with its primary task being financial stabilization. It should also ensure development of financial innovations with more benefits and lesser costs and risks associated with it. Table of Contents Table of Contents 3 1.Introduction 4 2.Role of Innovation in Financial System 4 2.1Technological Impact 4 2.2Globalization 5 2.3Deregulation 5 2.4Europe and its Financial Integration 5 Nature of Financial Innovation 6 Benefits of Financial Innovation 7 Demerits of Financial Innovation 8 Conclusion 8 References 10 1. Introduction Financial innovations can be defined as the improvements in the financial system through the development of new financial techniques and instruments. ...
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