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Are structured products a sustainable financial innovation? A lesson from the European markets

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Abstract

Structured products are a complex outcome of the financial innovation process, and what many would like to know is who profits from this kind of financial innovation and whether issuers are influenced by market trends. Taking into account the complexity of structured products, we analyze the payoff of 14,701 roducts issued in Europe that expired between January 2008 and December 2012. Observing the issuers’ time–to–market, we find a negative relationship between the volumes issued and the number of listed products, which could be construed as a signal for pushing behavior on the part of issuers. Considering that, the product intervention approach by the regulators could be useful in discouraging the pushing behaviors.

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  • Burchi, Alberto & Musile Tanzi, Paola, 2014. "Are structured products a sustainable financial innovation? A lesson from the European markets," Journal of Financial Perspectives, EY Global FS Institute, vol. 2(3), pages 147-158.
    • Handle: RePEc:ris:jofipe:0053
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    More about this item

    Keywords

    financial innovation; derivatives; structured products; certificates; financial regulation; product intervention approach;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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