Financial Innovation in Capital Market
INTERNATIONAL CONFERENCE ON INNOVATIVE PRACTICES IN MANAGEMENT
FINANCIAL INNOVATION IN CAPITAL MARKETS
Dr.C.Meera ** Mr.R.S.Mohan ***T.Ramesh
Financial innovation has been a continuous and integral part of growth of the capital markets. Greater freedom and flexibility have enabled companies to reinvent and innovate financial instruments. Many factors such as increased interest rate, volatility, frequency of tax and regulatory changes etc. have stimulated the process of financial innovation. The deregulation of financial service industry and increased competition within investment banking also led to increased activities to design new products, develop better processes, and implement more effective solution for increasingly complex financial problems. Financial instrument is a combination of characteristics such as promised yield liquidity, maturity, security and risk. The process of financial innovation involves creating new instruments and technique by unpackaging and rebinding the same characteristics in different fashion to suit the constantly changing needs of the issuers and the investors. At times it leads to introduction of revolutionary new products such as swap, mortgage, and zero coupon bonds to finance leveraged buyouts. Sometimes it involves the piecing together of existing products and process to fit in a particular set of circumstances. Many companies consider the types of securities (debt and equity), and a handful of simple financial institutions (banks or exchanges). However, there is a range of financial products, types of financial institutions and a variety of processes that these institutions employ to do business.
'Financial innovation' is the act of creating and popularizing new financial instruments as well as new financial technologies, institutions and markets. The "innovations" are classified into
• Product innovation- The product innovations may be represented by new derivative contracts, new corporate securities or new forms
FINANCIAL INNOVATION IN CAPITAL MARKETS
Dr.C.Meera ** Mr.R.S.Mohan ***T.Ramesh
Financial innovation has been a continuous and integral part of growth of the capital markets. Greater freedom and flexibility have enabled companies to reinvent and innovate financial instruments. Many factors such as increased interest rate, volatility, frequency of tax and regulatory changes etc. have stimulated the process of financial innovation. The deregulation of financial service industry and increased competition within investment banking also led to increased activities to design new products, develop better processes, and implement more effective solution for increasingly complex financial problems. Financial instrument is a combination of characteristics such as promised yield liquidity, maturity, security and risk. The process of financial innovation involves creating new instruments and technique by unpackaging and rebinding the same characteristics in different fashion to suit the constantly changing needs of the issuers and the investors. At times it leads to introduction of revolutionary new products such as swap, mortgage, and zero coupon bonds to finance leveraged buyouts. Sometimes it involves the piecing together of existing products and process to fit in a particular set of circumstances. Many companies consider the types of securities (debt and equity), and a handful of simple financial institutions (banks or exchanges). However, there is a range of financial products, types of financial institutions and a variety of processes that these institutions employ to do business.
'Financial innovation' is the act of creating and popularizing new financial instruments as well as new financial technologies, institutions and markets. The "innovations" are classified into
• Product innovation- The product innovations may be represented by new derivative contracts, new corporate securities or new forms