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Financial Innovation and Its Effects on Financial Stability and Efficiency

Author

Listed:
  • ªargu Alina Camelia

    („Alexandru Ioan Cuza” University Iasi, Doctoral School of Economics)

  • Roman Angela

    („Alexandru Ioan Cuza” University Iasi Faculty of Economics and Business Administratio)

Abstract

In the last decades, financial innovation has been in the fore front of all the major changes which have affected the financial system, both at national and international level. Thus, the research of this subject has become a major field of research, its importance growing since the start of the current financial and economic crisis. In this context, the aim of this paper is to underline the impact of financial innovation on the stability and efficiency of the financial system while also taking into account the implications over the systemic stability of an economy. The results of our study highlight the need for a cautionary approach regarding the usage of financial innovations, as new financial instruments used excessively or in an inappropriate meaner, without proper regulations and supervision, can lead to financial instability and the accumulation of major systemic risks.

Suggested Citation

  • ªargu Alina Camelia & Roman Angela, 2011. "Financial Innovation and Its Effects on Financial Stability and Efficiency," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 2035-2041, May.
    • Handle: RePEc:ovi:oviste:v:11:y:2011:i:1:p:2035-2041
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    More about this item

    Keywords

    financial innovation; financial stability; efficiency; crisis; systemic risk;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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