Financial Innovation and the Economics of Banking and the Financial System

Llewellyn, David T.

doi:10.4337/9781848447189.00007

Cited by 22 publications

(28 citation statements)

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“…Financial innovation has long been a catalyst for economic, social and political change. For example, innovation of complex, structured, credit risk-shifting instruments such as asset-backed securities -collateralised debt obligations (ABS-CDOs) since the early 1990's proved important in catalysing a transition from old to new banking models (Llewellyn, 2009). (Dunbar and Martinuzzi, 2012), and the inability of stakeholders to manage the complexities that financial products like derivatives present, partly due to the idea of collective acceptance in which such financial products are valuable not because of their individual properties but because a group of people accept their status as a representation of value (Nightingale and Spears, 2010).…”

Section: Financial Innovation and New Product Developmentmentioning

confidence: 99%

Governance of new product development and perceptions of responsible innovation in the financial sector: insights from an ethnographic case study

Asante

Owen

Williamson

2014

Journal of Responsible Innovation

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We describe an ethnographic study within a global asset management company aimed at understanding the process and governance of new product development and perceptions of responsible innovation. We observed innovation to be incremental, with a clearly -structured stage gating model of governance involving numerous internal and external actors that was framed by regulation and co-ordinated by a small product development team. Responsible innovation was framed largely in terms of considering client needs when innovating and the understanding of operational, legal, regulatory and reputational risks. Staff perceived the company as having an inherently cautious culture, where the probability of bringing something destructive to market was perceived as being low. We conclude that the observed stage gating architecture offers considerable scope as a mechanism for systematic embedding of more broadly framed, emerging concepts of responsible innovation.Keywords: financial innovation; new product development; responsible innovation; governance; responsibility; stage gating 1. IntroductionIn this paper we investigate the process and governance of financial innovation and perceptions of responsible innovation in a global asset management company. This research sits within a broader goal to understand how theoretical concepts of responsible innovation emerging in science and technology studies and beyond (e.g., Owen et al, 2013;von Schomberg, 2013) might be framed and implemented in financial settings. To date there has been only little consideration of responsible innovation in finance (Armstrong et al, 2012;Muniesa and Lenglet, 2013) and almost no primary research.While the academic literature suggests some possible features of contemporary financial innovation, there have in fact been few documented accounts of either the process or governance of financial innovation in commercial organisations (Frame and White, 2004). We therefore elected to take a case study approach to our research. The paper is laid out as follows: We first briefly review the literature on financial innovation and its governance. We go on to describe in detail the process and governance of financial innovation in a global asset management company undertaking significant new product development. We then describe perceptions of responsible innovation in the company before finally discussing how established innovation governance approaches in this and other commercial organisations might be enlarged to embed a more broadlyframed responsible innovation approach. Financial Innovation and New Product DevelopmentInnovation in finance has a long history, at least as far back as 3000 BCE with the introduction in Mesopotamia of commodity money, early forms of banking, personal loans, interest and contingency claims (Allen and Gale, 1994;Goetzmann and Rouwenhorst, 2005;Allen and Yago, 2010). MacKenzie (2006) argues that financial innovation is a socio-technical phenomenon that has been shaped by modern economic theories of finance. Many authors (Llewellyn 1992;W...

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Section: Financial Innovation and New Product Developmentmentioning

confidence: 99%

Governance of new product development and perceptions of responsible innovation in the financial sector: insights from an ethnographic case study

Asante

Owen

Williamson

2014

Journal of Responsible Innovation

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“…With a closer focus on the above-mentioned peculiarities of financial brokers, Llewellyn (2009) suggests three different factors to identify financial innovation: the type, the cause and the function.…”

Section: Definitionsmentioning

confidence: 99%

Financial innovation: theoretical issues and empirical evidence in Italy and in the UK

Rossignoli

Arnaboldi

2009

Int Rev Econ

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“…Banks, which had become progressively more reliant on short-term market funding for their lending activities and less reliant on their deposit base, found their ability to lend was closely connected to the availability of funds in the money markets. Banks substantially changed their funding model a decade before the financial crisis emerged (Borio 2008, Mizen 2008, Llewellyn 2009) making them more dependent on short-term market-based finance up until the point that the financial crisis occurred. We might conclude that the consequence of this change would be a close correspondence between the rates that banks charged to lend to each other and the rates that they offered to households and firms, but this is not the case.…”

Section: Introductionmentioning

confidence: 99%

How Do Anticipated Changes to Short-Term Market Rates Influence Banks' Retail Interest Rates? Evidence from the Four Major Euro Area Economies

2013

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Financial Innovation and the Economics of Banking and the Financial System

Cited by 22 publications

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Governance of new product development and perceptions of responsible innovation in the financial sector: insights from an ethnographic case study

Governance of new product development and perceptions of responsible innovation in the financial sector: insights from an ethnographic case study

Financial innovation: theoretical issues and empirical evidence in Italy and in the UK

How Do Anticipated Changes to Short-Term Market Rates Influence Banks' Retail Interest Rates? Evidence from the Four Major Euro Area Economies

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