The Eurodollar Revolution in Financial Technology: Deregulation, Innovation and Structural Change in Western Banking

Stefano Battilossi
Additional contact information
Stefano Battilossi: Universidad Carlos III Madrid

Chapter 2 in Financial Markets and Organizational Technologies, 2010, pp 29-63 from Palgrave Macmillan

Abstract: Abstract Modern financial theories based on the economics of information suggest that banks arise as a response to existing frictions in the process of acquiring information and making transactions. Bank intermediaries ameliorate such frictions through brokerage (which enhances the matching of borrowers and lenders by overcoming information asymmetries) and portfolio transformation (banks acting as delegated monitors and providing liquidity insurance). The way banks perform these functions — their ‘financial technology’ — changed dramatically in the 1970s on a global scale. We define financial technology as a body of knowledge that specifies the whole range of activities creating economic value in financial intermediation, encompassing product, process and organizational technologies. Financial innovations occur in each of these areas and improve the efficiency with which intermediaries perform their basic functions by expanding opportunities for risk sharing, lowering transaction costs and reducing asymmetric information and agency costs (Merton 1995: 463).

Keywords: Interest Rate; Financial Technology; Money Market; Capital Control; Financial Innovation (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (1)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-0-230-28317-6_2

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230283176

DOI: 10.1057/9780230283176_2

Access Statistics for this chapter

More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().