Financial innovation plays a pivotal role in the economic growth of a country.It can be evidenced from the recent hike in the jobs in finanial industry despite recession.The very thing shows that if something positive happens in financial market, it does effect the economic growth of any country
By
ajay meghani, Backup Branch Manager, hdfc bank
| 03 15 2010 17:25:52 +0000
Yes. Certainly. In addition to boosting economic growth, financial innovations facilitat our lives. But for financial innovations, we could have continued to live in barter economy with wastages all around! In this direction, sometime back I wrote a blog on Financial innovations and financial crises covering the comment of Lord Turner, Financial Services Authority of UK who blamed financial innovations for the recent financial crises. It may be relevant to refer this blog here and now!(www.blogs.siliconindia.com/guru_raghavan)
By
guru_raghavan , Head/VP/GM-Corporate Planning/Strategy, An IT MNC
| 03 15 2010 14:02:17 +0000
fianancial innovation is necessary like we have seen ULIP and mutual fund made a big impact on financial market and investment is increse which provide a bettr growth.
By
mahesh v kalachatolu, MBA/PGDM student, jagruti institute of eng n technology
| 03 15 2010 09:50:02 +0000
So a hunter-gatherer would be quite justified in scratching their head at your new-fangled "money". I am sure it must have been very complicated or may be it still is. But few of us would want to live without it. Yes friends, money were probably the first financial innovation we ever made. We have come a long way. As in the world of physics, risk is not created or destroyed, just transferred. It may become more concentrated or have a somewhat different shape but it was their and remains there! In our example below, if it was not the speculator, then it would have been the exporter. Many of the recent problems were triggered by accounting not by financial innovation per se, although it is true that new products may be devised to work around or even exploit rules and regulations. If an exporter is not interested in speculation, then it is better to hedge the forex receivables using suitable derivative. This way, an asset with risk is converted into (i) a risk-free asset & (ii) a risking contract. The first part is the beauty of these products but then there is second or the problematic part. It is this part that dose not meet the investors’ needs, but meets the investors’ (read speculators’) wants. Speculators to leverage when they aren’t supposed to lever, take exposure in markets where they are not supposed to take exposure, where they have no economic interest. A lot of them use derivatives for gaming and gambling. However, the risk was there anyway. Had it not been the investor then it would have been the exporter himself who would have bear the brunt. Financial innovations are very important for economic development. They meet many of financial objectives besides provide employment to millions of people in India alone. However, to take care of the negativity involved, we also need things like active exchanges & regulators and proactive accounting policies to ensure that we keep trouble at bay.
By
Ashutosh , Freelancer, Ashutosh Rai & Co.
| 03 11 2010 06:24:54 +0000
Yes, absolutely it would help for better growth. But it should be more transparant. By innovations public awareness will increase and it more freindly user. The investers/public can grt the choice of investment/expenditure where to go.
By
Chandramouli , Sr. Manager - QS & Contracts
| 03 11 2010 05:01:27 +0000
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any input of money in econmy will provide us benefits in the long run Yes there will be better economic growth , more employment, more demand and more supply thus the country progresses
By
Nikhil , Senior Manager, Insurance
| 03 30 2010 15:33:19 +0000
I strongly feel that these innovations are nothing but increasing options for the existing instruments..Thus how can an alternative instrument help in boosting the economic growth of the economy???They have to be profitable then only they will boost up the growth...
By
Shraddha Periwal, Finance Executive, Cuprum Bagrodia Limited
| 03 15 2010 12:28:19 +0000
Financial Innovation can only supplement Economic growth. It would be more prudent to infuse Financial Knwoledge to the discerning Indians.
By
Ranjeet Rony Sanyal, Marketing Manager, Group Product Manager
| 03 11 2010 04:26:50 +0000
No, I don't totally agree to the point that financial innovations boost the economy. What is evident is that they contributed to the current economic crises, and added greatly to the burden on taxpayers.
There is also ample evidence that they have been useful in accounting, regulatory and tax arbitrage, activities that may enhance the profits of the companies employing them, but not necessarily the efficiency of the economy. They have helped governments and firms hide their financial doings from taxpayers and investors. And those benefiting from such deception have been willing to pay amply for it, with large profits to the innovators, even if society as a whole loses.
By
Leena Khade, Banc Assurance, Deutsche Bank
| 03 10 2010 12:27:26 +0000
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