IDEAS home Printed from https://ideas.repec.org/a/spr/fininn/v3y2017i1d10.1186_s40854-017-0060-2.html
   My bibliography  Save this article

Financial innovation and its governance: Cases of two major innovations in the financial sector

Author

Listed:
  • Keren Naa Abeka Arthur

    (University of Cape Coast)

Abstract

The power of financial innovations to affect societies on global and intergenerational levels compels us to ask how we can ensure their responsible emergence in society. This requires an understanding of how innovation occurs and how it is governed in practice. Despite this, there is little research on the process and governance of financial innovation. The few studies conducted in this area have focused on the ‘backend’ of the innovation process. Therefore, using data from secondary sources, this study investigates how two major financial innovations occurred and were governed, and it discusses the findings in relation to those in the literature. This approach revealed that innovation processes fall within a continuum ranging from structured to unstructured. Moreover, lead times are potentially longer for innovations that are significantly disruptive, new to the market, and technological in nature. Finally, innovation processes can involve multiple stakeholders who use both statutory regulation and self-regulation for innovation governance. This paper concludes that innovation processes and their governance can vary significantly according to different areas of the financial landscape and associated innovation contexts. Thus, there is a need for more empirical work to understand such variability and practices in the sector as a whole.

Suggested Citation

  • Keren Naa Abeka Arthur, 2017. "Financial innovation and its governance: Cases of two major innovations in the financial sector," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 3(1), pages 1-12, December.
    • Handle: RePEc:spr:fininn:v:3:y:2017:i:1:d:10.1186_s40854-017-0060-2
    DOI: 10.1186/s40854-017-0060-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1186/s40854-017-0060-2
    File Function: Abstract
    Download Restriction: no
    File URL: https://libkey.io/10.1186/s40854-017-0060-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. W. Scott Frame & Lawrence J. White, 2004. "Empirical Studies of Financial Innovation: Lots of Talk, Little Action?," Journal of Economic Literature, American Economic Association, vol. 42(1), pages 116-144, March.
    2. Lawrence J. White, "undated". "Technological Change, Financial Innovation, and Financial Regulation: The Challenges for Public Policy," Center for Financial Institutions Working Papers 97-33, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. Pradier Pierre-Charles M., 2011. "Administering Systemic Risk vs. Administering Justice: What Can We Do Now that We Have Agreed to Pay Differences?," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 1(1), pages 1-6, January.
    4. Burgess, Stephen, 2011. "Measuring financial sector output and its contribution to UK GDP," Bank of England Quarterly Bulletin, Bank of England, vol. 51(3), pages 234-246.
    5. Stefanadis, Christodoulos, 2003. "Self-Regulation, Innovation, and the Financial Industry," Journal of Regulatory Economics, Springer, vol. 23(1), pages 5-25, January.
    6. Paul Nightingale & Tim Brady & Andrew Davies & Jeremy Hall, 2003. "Capacity utilization revisited: software, control and the growth of large technical systems," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 12(3), pages 477-517, June.
    7. Pacces, Alessio M., 2010. "Uncertainty and the financial crisis," Journal of Financial Transformation, Capco Institute, vol. 29, pages 79-93.
    8. Fumiko Hayashi & Richard J. Sullivan & Stuart E. Weiner, 2006. "A guide to the ATM and debit card industry - 2006 update," Monograph, Federal Reserve Bank of Kansas City, number 2006agttaadci2, March.
    9. Bernardo Batiz-Lazo & Kassa Woldesenbet, 2006. "The dynamics of product and process innovations in UK banking," International Journal of Financial Services Management, Inderscience Enterprises Ltd, vol. 1(4), pages 400-421.
    10. Stout Lynn A., 2011. "Risk, Speculation, and OTC Derivatives: An Inaugural Essay for Convivium," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 1(1), pages 1-15, January.
    11. Josh Lerner & Peter Tufano, 2011. "The Consequences of Financial Innovation: A Counterfactual Research Agenda," NBER Chapters, in: The Rate and Direction of Inventive Activity Revisited, pages 523-575, National Bureau of Economic Research, Inc.
    12. Nightingale, Paul & Poll, Robert, 2000. "Innovation in Investment Banking: The Dynamics of Control Systems within the Chandlerian Firm," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 9(1), pages 113-141, March.
    13. Delimatsis, Panagiotis, 2011. "Financial Innovation and Transparency in Turbulent Times," Journal of Financial Transformation, Capco Institute, vol. 33, pages 99-112.
    14. Fabian Muniesa & Marc Lenglet, 2013. "Responsible innovation in finance: directions and implications," Post-Print halshs-00817383, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yu-En Lin & Jia-Qi Yu & Hsiang-Hsuan Chih & Kung-Cheng Ho, 2022. "Near is more: learning efficiency in research and development innovation among interlocking firms," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-30, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mustansar, Talreja, 2023. "Financial innovation, technological improvement and bank’ profitability," OSF Preprints 8wy95, Center for Open Science.
    2. Tamer Khraisha & Keren Arthur, 2018. "Can we have a general theory of financial innovation processes? A conceptual review," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 4(1), pages 1-27, December.
    3. Biondi Yuri, 2016. "Empowering Market-Based Finance: A Note on Bank Bailouts in the Aftermath of the North Atlantic Financial Crisis of 2007," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 6(1), pages 79-84, March.
    4. Mehmet Balcilar & Riza Demirer, 2014. "The Effect of Global Shocks and Volatility on Herd Behavior in Borsa Istanbul," BIFEC Book of Abstracts & Proceedings, Research and Business Development Department, Borsa Istanbul, vol. 1(2), pages 142-172, March.
    5. Dominic Atogumsekiya Anarigide & Haruna Issahaku & Stanley Kojo Dary, 2023. "Drivers of financial innovation in sub-Saharan Africa," SN Business & Economics, Springer, vol. 3(9), pages 1-21, September.
    6. Ivan Diaz-Rainey & John Ashton & Maz Yap & Murat Genc & Rosalind Whiting, 2015. "The determinants of regulatory responses to risks from financial innovation: Survey evidence from G20," Working Papers 15001, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
    7. W. Scott Frame & Lawrence J. White, 2009. "Technological change, financial innovation, and diffusion in banking," FRB Atlanta Working Paper 2009-10, Federal Reserve Bank of Atlanta.
    8. Heikki Marjosola, 2021. "The problem of regulatory arbitrage: A transaction cost economics perspective," Regulation & Governance, John Wiley & Sons, vol. 15(2), pages 388-407, April.
    9. Joakim Björkdahl & Magnus Holmén, 2019. "Exploiting the control revolution by means of digitalization: value creation, value capture, and downstream movements," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(3), pages 423-436.
    10. Guzin Gulsun Akin & Ahmet Faruk Aysan & Gültekin Gollu & Levent Yildiran, 2014. "Formal and Informal Regulations for Credit Card Payment Services," BIFEC Book of Abstracts & Proceedings, Research and Business Development Department, Borsa Istanbul, vol. 1(2), pages 1-33, March.
    11. Ghazi Zouari & Imen Abdelmalek, 2020. "Financial Innovation, Risk Management, And Bank Performance," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 9(1), pages 77-100.
    12. Antonina Waszczuk, 2014. "Assembling International Equity Datasets – Review of Studies on the Cross-Section of Common Stocks," BIFEC Book of Abstracts & Proceedings, Research and Business Development Department, Borsa Istanbul, vol. 1(2), pages 34-65, March.
    13. Zinman, Jonathan, 2009. "Debit or credit?," Journal of Banking & Finance, Elsevier, vol. 33(2), pages 358-366, February.
    14. Sezer Bozkus Kahyaoglu & M. Vedat Pazarlioglu, 2014. "Hedging Strategy for Electricity Market Price Volatility: The Case of Turkish Electricity Market," BIFEC Book of Abstracts & Proceedings, Research and Business Development Department, Borsa Istanbul, vol. 1(2), pages 196-210, March.
    15. Ahmet Duran & Burhaneddin Izgi, 2014. "Comovement and Polarization of Interest Rate and Stock Market in Turkey," BIFEC Book of Abstracts & Proceedings, Research and Business Development Department, Borsa Istanbul, vol. 1(2), pages 130-141, March.
    16. Kauffman, Robert J. & Liu, Jun & Ma, Dan, 2015. "Innovations in financial IS and technology ecosystems: High-frequency trading in the equity market," Technological Forecasting and Social Change, Elsevier, vol. 99(C), pages 339-354.
    17. Ege Yazgan, 2014. "The effect of investors' confidence on monetary policy- economic growth relationship: a Multivariate GARCH approach," BIFEC Book of Abstracts & Proceedings, Research and Business Development Department, Borsa Istanbul, vol. 1(2), pages 82-109, March.
    18. Stout, Lynn & Library, Cornell, 2018. "New Thinking on "Shareholder Primacy"," LawArXiv fn2gu, Center for Open Science.
    19. W. Scott Frame & Larry D. Wall & Lawrence J. White, 2018. "Technological Change and Financial Innovation in Banking: Some Implications for Fintech," FRB Atlanta Working Paper 2018-11, Federal Reserve Bank of Atlanta.
    20. Ernkvist, Mirko, 2015. "The double knot of technology and business-model innovation in the era of ferment of digital exchanges: The case of OM, a pioneer in electronic options exchanges," Technological Forecasting and Social Change, Elsevier, vol. 99(C), pages 285-299.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:fininn:v:3:y:2017:i:1:d:10.1186_s40854-017-0060-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.