Of Financial Innovations and Excesses

Financial Innovation in Switzerland: Innovative Strategies in Ticino´s Banks

“…In the literature it is often stressed the growing contribution of universities to the development of financial innovations (Van Horne 1985), to the production of new financial formulas and financial patents (Lerner 2002), but it is not clear what could be the best role for academia (Anderloni 2004). The analysis of the Wegelin case could provide useful insights on this topic.…”

A taxonomy of the 'dark side' of financial innovation: the cases of high frequency trading and exchange traded funds

“…With respect to the first research question it is evident that financial innovation has long been a contentious issue (see for example Van Horne, 1985). It is a double edged sword; it can be a force for good but it can also have negative consequences since financial innovations are often associated with financial crises and financial malpractice.…”

“…The above quote delivered from the 1984 Presidential Address to the American Finance Association by James C. Van Horne highlights how financial innovation has been a contentious issue for some time. Van Horne (1985) argues that genuine financial innovation is unambiguously a good thing and that it should be distinguished from products and services labelled as such but which are just masked efforts to profiteer from undiscerning clients. As acknowledged by Van Horne (1985), however, distinguishing between the two ex ante is not easy.…”

“…Van Horne (1985) argues that genuine financial innovation is unambiguously a good thing and that it should be distinguished from products and services labelled as such but which are just masked efforts to profiteer from undiscerning clients. As acknowledged by Van Horne (1985), however, distinguishing between the two ex ante is not easy. Accordingly, this section explores two related questions: (1) How is financial innovation defined?…”

Loan-Portfolio Quality and the Diffusion of Technological Innovation

“…Financial innovation has played an important role in shaping financial markets by extending their scope and increasing their efficiency (Van Horne, 1985). This is particularly true for financial intermediaries in the fields of risk measurement and risk management, where new analytic tools such as credit-scoring methodology, wider availability of data, better information processing (advances in IT), and new financial instruments such as credit derivatives have profoundly changed the nature of financial intermediation.…”