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Tables of Contents for Financial Innovation
Chapter/Section Title
Page #
Page Count
Acknowledgements
x
Publisher's Note
xi
Series Preface
xii
Preface
xiii
Technical and Financial Innovation: An Introduction
1
12
Technical Innovation and the Industrial Economics Literature
3
3
Financial Innovation
6
2
Structure of the Book
8
5
Financial Innovations---Securitisation and Off-Balance Sheet Activities
13
38
Introduction
15
1
Financial Innovation Over the Last 20 Years
16
3
Securitisation and OBSAs
19
17
Overview
19
3
Eurodollar Market
22
1
Eurobond Market
22
2
Floating-Rate Notes and Eurodollar Floating Rate Notes
24
1
Euronotes: NIFs, ECP, and EMTNs
25
3
Euronotes and Syndicated Loans
28
1
Bank Asset Securitisation
29
2
Loan Sales
31
1
Other Off-Balance Sheet Activities (OBSAs)
32
4
Factors Affecting Supply of Financial Innovations: Globalisation, Technology, and Competition
36
3
Why Banks Issue OBS Assets
39
3
Demand for Financial Innovation
42
5
Demand-Driven Theory of Financial Innovations
43
1
Price-Risk Transferring Innovations
43
2
Credit-Risk Transferring Innovations
45
1
Liquidity-Enhancing Innovations
45
1
Credit-Generating Innovations
45
2
Equity-Generating Innovations
47
1
Demand and Supply of Financial Innovations: Deficit versus Surplus Units
47
1
Conclusion
47
4
Theoretical Approaches Towards Financial Innovation
51
30
Introduction
53
1
Constraint-Induced Hypothesis
54
2
The Regulatory Dialectic
56
4
Financial Innovation as a Bundling and Unbundling Process in Incomplete Markets
60
4
Security Design and Incomplete Market Models of Financial Innovation
64
9
Risk Sharing
64
2
Securities and Risk Sharing
66
1
Incomplete Markets
67
1
Optimal Security Design
68
1
Equilibrium and the Incentives to Innovate
69
1
Extensions to the Basic Framework
69
1
Innovation by Financial Institutions
70
3
General Equilibrium Models of Financial Innovation
73
3
Security Design in a Linear Framework
76
1
Conclusion
77
4
Models of Innovation: The Industrial Economics Literature
81
56
Introduction
83
2
Basic Definitions
85
3
Product versus Process Innovation
85
1
Types of Innovation
85
1
Uncertainty and the Assumption of Perfect Information
86
1
Demand-Pull versus Technology-Push Hypotheses
87
1
Schumpeterian Hypotheses
88
3
Monopoly and Innovation
90
1
Firm Size and Innovation
90
1
The Incentive to Innovate
91
5
The Arrow Model
91
2
The Arrow-Demsetz Model
93
2
Schumpeter versus Arrow
95
1
Pace of Development and Timing of Innovation
96
11
Scherer's Model
97
7
Barzel's Model
104
3
Decision-Theoretic Models of Innovation
107
6
Game-Theoretic Models of Innovation
113
15
Winner-Take-All Games of Innovation
113
6
The Effects of Imitation on the Innovative Activity
119
3
Asymmetric Models and Pre-emptive Innovations
122
6
Summary of the Literature
128
5
Conclusion
133
4
Models of Innovation Adoption and Diffusion
137
54
Introduction
139
1
Rational-Efficiency Models of Innovation Adoption
140
6
Heterogeneous Population of Potential Adopters
141
3
Strategic Interactions and Innovation Adoption
144
2
Bandwagon Theories of Innovation Adoption
146
8
Positive Network Externalities
146
5
Competitive and Institutional Bandwagon Pressures
151
3
Empirical Models of Diffusion
154
33
Basic Models
155
3
The Mansfield (1961) Model
158
6
Estimation of the Internal-Influence Model
164
1
The Bass (1969) Model
165
4
Estimation of the Mixed-Influence Model
169
1
External-Influence Models
170
3
Assumptions Underlying the Fundamental Model
173
1
Flexible Models
174
2
Extensions and Refinements
176
1
Diffusions Models with Time-varying Parameters
176
7
Multi-adoption Diffusion Models
183
3
Evaluation of Diffusion Models
186
1
Conclusion
187
4
Financial Innovation: An Industrial Economics Perspective
191
28
Introduction
193
1
Comparison of the Industrial Economics and the Finance Literature
193
2
Models of Innovation With Application to the Financial Industry
195
6
Anderson and Harris (1986)
195
5
Kapadia and Puri's (1995) Model
200
1
Empirical Aspects of the Innovation Process in Financial Markets
201
1
Empirical Diffusion Patterns of OBSAs
202
5
A Framework for Modelling Innovation Adoption in Financial Markets
207
5
Rational-Efficiency as an Explanation of Innovation Diffusion
210
1
Bandwagon-Pressure Theories of Innovation Diffusion
211
1
Categories of Adopters
212
4
Internal versus External Adopters
212
3
Repeat Adopters
215
1
Conclusion
216
3
Modelling the Diffusion of Financial Innovations: Methodological Approaches
219
22
Introduction
221
1
Innovation Adoption and Adopters in Financial Markets
221
1
Single-Adoption Diffusion Models
222
2
The Logistic-Curve Model
222
1
The Non-Uniform Influence Model (NUI)
223
1
Repeat-Adoption Models
224
6
The Non-Uniform Influence Repeat Adoption Model (NUIR)
224
2
The NUIR 1 Model
226
2
The NUIR 2 Model
228
2
Data
230
1
The Market for Note Issuance Facilities (NIFs)
231
4
The Development of the Market
231
1
Underwriting Banks in the NIFs Market
232
1
Arrangers of NIFs
232
3
The Junk Bond Market
235
4
Development of the Market
235
1
Participating Banks
236
2
Investors in the Junk Bonds Market
238
1
Issuers of Junk Bonds
239
1
Conclusion
239
2
Modelling the Diffusion of Financial Innovations: Some Empirical Evidence
241
24
Introduction
243
1
Single-Adoption Models
244
9
The Logistic Curve
244
1
NIFs
244
1
Junk Bonds
244
2
The NUI Model
246
1
Actual versus Expected Number of Adopters
246
2
Time-Varying Internal Influence
248
2
Internal versus External Adopters
250
3
Repeat-Adoption Models: The NUIR, the NUIR 1 and the NUIR 2 Models
253
8
The Mahajan (1983) NUIR Model
253
1
The NUIR 1 Model
254
3
The NUIR 2 Model
257
2
First-Time versus Repeat Adopters
259
2
Conclusion
261
4
Conclusion and Summary
265
12
Conclusion and Summary
267
4
Limitations of Modelling the Financial Innovation Process
271
3
Future Research
274
3
Bibliography
277
14
Index
291