Some Thoughts on Financial Innovation and Financial Crises

Giovanni Palmerio ()
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Giovanni Palmerio: Department of Economics – LUMSA University, Rome

The AMFITEATRU ECONOMIC journal, 2009, vol. 11, issue 26, 522-532

Abstract: Financial innovation, which was originally introduced for a positive aim, over time has actually had relevant negative effects on the economy. This occurred because it encouraged intermediaries to change their way of operating, allowing them to modify their solvency without changing radically their external shape. Financial innovation, which developed on account of both the need to finance the growing USA external debt and the tendency of American families to incur into excessive debts, is certainly the main cause lying behind the recent financial crises. In the future, these can be avoided only by means of a strict regulation of financial markets.

Keywords: financial crises; financial innovation; international financial markets (search for similar items in EconPapers)
JEL-codes: G01 G15 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (4)

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