IDEAS home Printed from https://ideas.repec.org/p/bis/biswps/564.html

Moore's Law vs. Murphy's Law in the financial system: who's winning?

Author

Listed:
  • Andrew W Lo

Abstract

Breakthroughs in computing hardware, software, telecommunications and data analytics have transformed the financial industry, enabling a host of new products and services such as automated trading algorithms, crypto-currencies, mobile banking, crowdfunding and robo-advisors . However, the unintended consequences of technology-leveraged finance include firesales, flash crashes, botched initial public offerings, cybersecurity breaches, catastrophic algorithmic trading errors and a technological arms race that has created new winners, losers and systemic risk in the financial ecosystem. These challenges are an unavoidable aspect of the growing importance of finance in an increasingly digital society. Rather than fighting this trend or forswearing technology, the ultimate solution is to develop more robust technology capable of adapting to the foibles in human behaviour so users can employ these tools safely, effectively and effortlessly. Examples of such technology are provided.

Suggested Citation

  • Andrew W Lo, 2016. "Moore's Law vs. Murphy's Law in the financial system: who's winning?," BIS Working Papers 564, Bank for International Settlements.
    • Handle: RePEc:bis:biswps:564
    as

    Download full text from publisher

    File URL: http://www.bis.org/publ/work564.pdf
    File Function: Full PDF document
    Download Restriction: no
    File URL: http://www.bis.org/publ/work564.htm
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. David Elliott, 2013. "Financial Stability Paper No 20: Central counterparty loss-allocation rules," Bank of England Financial Stability Papers 20, Bank of England.
    2. Nikola Tarashev & Anna Zabai, 2016. "When pegging ties your hands," BIS Working Papers 547, Bank for International Settlements.
    3. Andres Murcia & Emanuel Kohlscheen, 2016. "Moving in tandem: bank provisioning in emerging market economies," BIS Working Papers 548, Bank for International Settlements.
    4. Anna, Petrenko, . "Мaркування готової продукції як складова частина інформаційного забезпечення маркетингової діяльності підприємств овочепродуктового підкомплексу," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 2(01).
    5. Michael Chui & Emese Kuruc & Philip Turner, 2016. "A new dimension to currency mismatches in the emerging markets - non-financial companies," BIS Working Papers 550, Bank for International Settlements.
    6. Stefan Avdjiev & Elod Takats, 2016. "Monetary policy spillovers and currency networks in cross-border bank lending," BIS Working Papers 549, Bank for International Settlements.
    7. Amir Dembo & Jean-Dominique Deuschel & Darrell Duffie, 2004. "Large portfolio losses," Finance and Stochastics, Springer, vol. 8(1), pages 3-16, January.
    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. Claessens, Stijn, 2017. "Regulation and structural change in financial systems," CEPR Discussion Papers 11822, C.E.P.R. Discussion Papers.

    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. Bruno Biais & Fany Declerck & Sophie Moinas, 2016. "Who supplies liquidity, how and when?," BIS Working Papers 563, Bank for International Settlements.
    2. Vivian Welch & Christine M. Mathew & Panteha Babelmorad & Yanfei Li & Elizabeth T. Ghogomu & Johan Borg & Monserrat Conde & Elizabeth Kristjansson & Anne Lyddiatt & Sue Marcus & Jason W. Nickerson & K, 2021. "Health, social care and technological interventions to improve functional ability of older adults living at home: An evidence and gap map," Campbell Systematic Reviews, John Wiley & Sons, vol. 17(3), September.
    3. Persson, Petra & Qiu, Xinyao & Rossin-Slater, Maya, 2021. "Family Spillover Effects of Marginal Diagnoses: The Case of ADHD," IZA Discussion Papers 14020, Institute of Labor Economics (IZA).
    4. Sant'Anna, Ana Claudia & Bergtold, Jason & Shanoyan, Aleksan & Caldas, Marcellus & Granco, Gabriel, 2021. "Deal or No Deal? Analysis of Bioenergy Feedstock Contract Choice with Multiple Opt-out Options and Contract Attribute Substitutability," 2021 Conference, August 17-31, 2021, Virtual 315289, International Association of Agricultural Economists.
    5. Tommaso Colussi & Ingo E. Isphording & Nico Pestel, 2021. "Minority Salience and Political Extremism," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 237-271, July.
    6. Erkmen Giray Aslim, 2019. "The Relationship Between Health Insurance and Early Retirement: Evidence from the Affordable Care Act," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 45(1), pages 112-140, January.
    7. Edna P. Conwi & Alexander G. Cortez & Normita Ramos, 2016. "Effects of the Dualized Training Program on the Occupational Interest of the Students Enrolled in Bachelor of Science in Hotel and Restaurant Management," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 7(1), pages 31-36, January.
    8. Nihan Akyelken, 2017. "Mobility-Related Economic Exclusion: Accessibility and Commuting Patterns in Industrial Zones in Turkey," Social Inclusion, Cogitatio Press, vol. 5(4), pages 175-182.
    9. Youngna Choi, 2022. "Economic Stimulus and Financial Instability: Recent Case of the U.S. Household," JRFM, MDPI, vol. 15(6), pages 1-25, June.
    10. Camillia Kong & John Coggon & Michael Dunn & Penny Cooper, 2019. "Judging Values and Participation in Mental Capacity Law," Laws, MDPI, vol. 8(1), pages 1-22, February.
    11. Prabheesh, K.P. & Anglingkusumo, Reza & Juhro, Solikin M., 2021. "The dynamics of global financial cycle and domestic economic cycles: Evidence from India and Indonesia," Economic Modelling, Elsevier, vol. 94(C), pages 831-842.
    12. Patrick Gagliardini & Christian Gouriéroux, 2011. "Approximate Derivative Pricing for Large Classes of Homogeneous Assets with Systematic Risk," Journal of Financial Econometrics, Oxford University Press, vol. 9(2), pages 237-280, Spring.
    13. Dindo, Pietro & Massari, Filippo, 2020. "The wisdom of the crowd in dynamic economies," Theoretical Economics, Econometric Society, vol. 15(4), November.
    14. Benno Ferrarini & Julie Maupin & Marthe Hinojales, 2017. "Distributed Ledger Technologies for Developing Asia," ADB Economics Working Paper Series 533, Asian Development Bank.
    15. Andrzej Cieślik & Sarhad Hamza, 2022. "Inward FDI, IFRS Adoption and Institutional Quality: Insights from the MENA Countries," IJFS, MDPI, vol. 10(3), pages 1-19, June.
    16. Anastasios Evgenidis & Apostolos Fasianos, 2019. "Monetary Policy and Wealth Inequalities in Great Britain: Assessing the role of unconventional policies for a decade of household data," Papers 1912.09702, arXiv.org.
    17. Ekaterina Aleksandrova & Kristian Behrens & Maria Kuznetsova, 2020. "Manufacturing (co)agglomeration in a transition country: Evidence from Russia," Journal of Regional Science, Wiley Blackwell, vol. 60(1), pages 88-128, January.
    18. Grazzini, Jakob & Richiardi, Matteo G. & Tsionas, Mike, 2017. "Bayesian estimation of agent-based models," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 26-47.
    19. Karl McShane, 2017. "Getting Used to Diversity? Immigration and Trust in Sweden," Economics Bulletin, AccessEcon, vol. 37(3), pages 1895-1910.
    20. Bruce A. Seaman, 2013. "The role of the private sector in cultural heritage," Chapters, in: Ilde Rizzo & Anna Mignosa (ed.), Handbook on the Economics of Cultural Heritage, chapter 5, pages i-i, Edward Elgar Publishing.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:bis:biswps:564. 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: Martin Fessler (email available below). General contact details of provider: https://edirc.repec.org/data/bisssch.html .

    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.