© 2001

Financial Innovations and the Welfare of Nations

How Cross-Border Transfers of Financial Innovations Nurture Emerging Capital Markets

  • Laurent L. Jacque
  • Paul M. Vaaler

Table of contents

  1. Front Matter
    Pages i-xii
  2. Financial Innovations and the Dynamics of Emerging Capital Markets

  3. Financial Innovations and Systemic Risk

    1. Front Matter
      Pages 23-23
    2. Peter Christoffersen, Vihang Errunza
      Pages 41-60
    3. Scot A. C. Gould, Stephen A. Naftilan, Sarkis J. Khoury, Danae J. Wright
      Pages 87-106
  4. Financial Innovations and Capital Market Integration

  5. International Securitization Innovations

    1. Front Matter
      Pages 197-197
    2. Tamar Frankel
      Pages 199-221
    3. Paul M. Vaaler
      Pages 223-245
    4. Anne Zissu, Charles Stone
      Pages 267-281
    5. Antoine Hyafil
      Pages 283-297
  6. Financial Derivatives Innovations

    1. Front Matter
      Pages 299-299
    2. Eric Briys, François de Varenne
      Pages 301-314

About this book


The central question addressed in Financial Innovations and the Welfare of Nations is how the transfer of financial innovations from developed to developing economies can nurture the dynamics of emerging capital markets. National capital markets can be positioned along a continuum ranging from embryonic to mature and emerged markets according to a decreasing "national cost of capital" criterion. In the introductory chapter Laurent Jacque argues that newly emerging countries are handicapped by a high cost of capital due to "incomplete" and inefficient financial markets. As capital markets graduate to higher level of "emergedness", their national firms avail themselves of a lower cost of capital that makes them more competitive in the global economy and spurs economic growth. Skillful transfer of financial innovations to emerging markets often encourages the deregulation of the country's financial services sector. This results into new conduits for a more efficient capital allocation process such as commercial paper, securitized consumer finance and other disintermediated modes of financing which out-compete traditional financial intermediaries (mostly commercial banks), reduce households' cost of living and conjointly fuel the dynamics of emerging markets. Our response to the central question of how the transfer of financial innovations can enhance the Wealth of Nations is to show that it reduces the cost of capital while not unduly increasing systemic risk. Part I examines the relationship between financial innovations and systemic risk of the international financial system.


Banking Capital Markets Credit Derivatives Derivatives Equity Market Finance Financial Market Investment Investments

Editors and affiliations

  • Laurent L. Jacque
    • 1
    • 2
  • Paul M. Vaaler
    • 1
  1. 1.Fletcher School of Law and DiplomacyTufts UniversityUSA
  2. 2.HEC School of ManagementFrance

About the editors

Laurent L. Jacque is a Professor of International Finance and Banking and Director of the Program of International Business Relations at the Fletcher School (Tufts University). He is also Professor of Finance and International Business at the HEC School of Management (France). Paul M. Vaaler is Assistant Professor of International Business, and Director of the Hitachi Center for Technology and International Affairs at the Fletcher School (Tufts University).

Bibliographic information

  • Book Title Financial Innovations and the Welfare of Nations
  • Book Subtitle How Cross-Border Transfers of Financial Innovations Nurture Emerging Capital Markets
  • Editors Laurent L. Jacque
    Paul M. Vaaler
  • DOI
  • Copyright Information Kluwer Academic Publishers 2001
  • Publisher Name Springer, Boston, MA
  • eBook Packages Springer Book Archive
  • Hardcover ISBN 978-0-7923-7328-5
  • Softcover ISBN 978-1-4613-5646-2
  • eBook ISBN 978-1-4615-1623-1
  • Edition Number 1
  • Number of Pages XII, 367
  • Number of Illustrations 0 b/w illustrations, 0 illustrations in colour
  • Topics Public Economics
    International Economics
    Finance, general
  • Buy this book on publisher's site


Praise for Financial Innovations and the Welfare of Nations
`In an increasingly connected world financial flows and innovation have taken center stage. For anyone who wants to understand how this new international arrangement affects one's life, business, and nation, this book is a must read.'
Walter B. Wriston, Former CEO, Citigroup
`This is a first-rate conference volume that covers all of the salient dimensions of innovation in modern financial markets. For innovations to contribute to the System in a durable way, they must be perceived as value-adding for both intermediaries and end-users, and the innovative structures must carry acceptable systemic risks. The essays in this collection provide a compelling overview of the innovation process and its impact on the financial dynamics of the global economy.'
Ingo Walter, Charles Simon Chair in Applied Financial Economics and Director, New York University Solomon Center