Financial Innovation and Transparency in Turbulent Times

Panagiotis Delimatsis ()
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Panagiotis Delimatsis: Tilburg University, Postal: Warandelaan 2, NL-5000 LE Tilburg, The Netherlands, http://www.tilburguniversity.edu/webwijs/show/&uid=p.delimatsis?uid=p.delimatsis

Journal of Financial Transformation, 2011, vol. 33, 99-112

Abstract: The stunning failure of a number of banks during the recent crisis has put regulatory intervention high on the agenda of governments. Adequate risk monitoring, including by credit rating agencies, measurement, and management have proven to be a daunting task, whereas regulation of innovative financial instruments has not brought about adequate disclosure and transparency. After critically reviewing the virtues and pitfalls of financial innovation, this paper offers an analysis of the main transparency initiatives undertaken in the E.U. and the U.S. in the wake of the crisis to harness various financial innovations that have marked the history of financial markets in the last three decades. The paper argues for better managed regulatory cooperation at the international level and warns against institutional deficiencies of the new regulatory frameworks in the E.U. and the U.S. One key message of the paper is that more regulation may hamper financial innovation; yet better regulation may direct entrepreneurial talents to financial innovations that enhance societal wellbeing and still yield reasonable returns.

Keywords: Financial innovation; transparency; derivatives; European Union; Dodd-Frank Act; World Trade Organization; General Agreement on Trade in Services (search for similar items in EconPapers)
JEL-codes: F13 G01 G15 G18 G38 K23 O38 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:jofitr:1519

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