This dissertation was a study of the impact of financial innovation upon financial institutions and some of the collateral macroeconomics effects. Financial innovation has impacted the distribution of household assets throughout the Group of Seven (G-7) countries and indirectly negatively influenced the usage of traditional monetary aggregates as a reliable tool to forecast the growth in the domestic money supply between 1960 and 1990. The empirical results indicate that the adoption of financial innovations by large U.S. commercial banks has not influenced their return on equity and the return of assets between 1990 and 1994. The variability of the return on equity and return on assets is reduced by those banks that have incorporated financial innovations over time. The policy implications of these results indicate that sufficient market instruments exist to assist banks to control interest rate exposure caused by the volatility of interest rates and uncertain funding sources. Any intervention by regulatory authorities could be welfare-decreasing for banks and possibly increase the level of interest rates or reduce the supply of credit to prospective borrowers.

Although financial innovations and deregulations are often argued to be one of the main causes of the current global financial crises, there are only a few cross-country empirical evidences. Using several proxy variables for different types of innovations and regulations of a total of 132 countries, this thesis analyzes the effects of various types of financial innovations and regulations on several types of financial crisis such as currency crisis and banking crisis, for countries with different income levels. The thesis shows that financial innovation in the form of securitization has a negative effect on a country’s financial stability, while stronger regulations in the form of restrictions on bank activities and entry requirements are positively associated with the financial stability. However, judicious implementation of financial regulations is required to cope with the financial crisis because some types of regulations, if implemented simultaneously, have countervailing effects and may exacerbate the financial crisis.

Although financial innovations and deregulations are often argued to be one of the main causes of the current global financial crises, there are only a few cross-country empirical evidences. Using several proxy variables for different types of innovations and regulations of a total of 132 countries, this thesis analyzes the effects of various types of financial innovations and regulations on several types of financial crisis such as currency crisis and banking crisis, for countries with different income levels. The thesis shows that financial innovation in the form of securitization has a negative effect on a country’s financial stability, while stronger regulations in the form of restrictions on bank activities and entry requirements are positively associated with the financial stability. However, judicious implementation of financial regulations is required to cope with the financial crisis because some types of regulations, if implemented simultaneously, have countervailing effects and may exacerbate the financial crisis.

Financial innovation is an important research topic modern economics. Financial innovation is an ongoing process where new financial products, services and procedures are created and it concerns important financial factors such as the regulatory restrictions, the relationship between financial innovation and the functionality of financial markets, the inefficiency of markets promoted by globalization and unexpected changes of economic status and financial intermediary. The previous literature that deals with financial innovation is relatively constrained compared to the significance of the issue, which is a surprise considering the relative abundance of such research on other sectors of finance and economics. The consequences of financial innovations concern the functional framework of capital markets, the microeconomic and the macroeconomic functional frameworks. This thesis studies the influence of diffusion of financial innovation to market participants’ frictions and their values, through a theoretical, mathematical and empirical framework. We derive a novel measure of the influence of financial innovation to the market participants based on their correlation friction patterns. The main objective is to highlight a number of aspects and dimensions of this field. In particularly, we aim to present: i) the theoretical framework on the role of financial innovation at the financial structure (the fundamental generating root causes and the effects on the function of financial markets, etc), and ii) the parameterization of the influence of financial innovation to market participants through a mathematical and econometric framework based on the participants’ minimum need for change, the diffusion rate and time parameter. We undertake an extensive empirical analysis about the influence of introduction and diffusion of a financial innovation to market participants. The findings lead us to the conclusion that the parametric function, which is followed in order to show the influence of diffusion of financial innovation, has a statistically significant impact on returns and volatility of financial and economic indices. / Οι χρηματοοικονομικές καινοτομίες αποτελούν σήμερα ένα κρίσιμο πεδίο έρευνας στο οικονομικό γίγνεσθαι. Η χρηματοοικονομική καινοτομία είναι μια τρέχουσα διαδικασία ανάδειξης νέων χρηματοοικονομικών προϊόντων/υπηρεσιών και διαδικασιών και αφορά βασικούς τομείς του χρηματοοικονομικού συστήματος όπως τους κανονιστικούς περιορισμούς που αντιμετωπίζει μια αγορά, τη λειτουργία των χρηματοοικονομικών αγορών και τη διαχείριση κινδύνου, τις απροσδόκητες μεταβολές μεταβλητών και την χρηματοοικονομική διαμεσολάβηση. Η προηγούμενη βιβλιογραφία και εμπειρική έρευνα των τελευταίων ετών που αναφέρεται στη χρηματοοικονομική καινοτομία είναι σχετικά μικρή σε σχέση με τη σημαντικότητα του ζητήματος, κάτι που αποτελεί έκπληξη λαμβάνοντας υπόψη την σχετική αφθονία παρόμοιων μελετών για άλλους τομείς της χρηματοοικονομικής. Οι συνέπειες των χρηματοοικονομικών καινοτομιών είναι σημαντικές και αφορούν το λειτουργικό πλαίσιο των αγορών, το μικροοικονομικό πλαίσιο λειτουργίας των επιχειρήσεων και το μακροοικονομικό πλαίσιο λειτουργίας των επιχειρήσεων και του κράτους. Αντικείμενο της διδακτορικής διατριβής είναι η επίδραση της διάχυσης μιας χρηματοοικονομικής καινοτομίας στη διαμόρφωση των χρηματοοικονομικών τριβών της αγοράς. Ο κύριος στόχος είναι να αναδείξουμε μια σειράς πτυχών και διαστάσεων αυτού του πεδίου και, κυρίως: i) το θεωρητικό πλαίσιο του ρόλου των χρηματοοικονομικών καινοτομιών στο χρηματοοικονομικό περιβάλλον (τα θεμελιώδη γενεσιουργά αίτια και τις βασικές επιπτώσεις στη λειτουργία των χρηματοοικονομικών αγορών, κτλ) και, ii) την παραμετροποίηση της επίδρασης της χρηματοοικονομικής καινοτομίας στους συμμετέχοντες της αγοράς μέσα από ένα μαθηματικό και οικονομετρικό πλαίσιο βασισμένο στο ελάχιστο κατώτερο όριο ανάγκης για αλλαγή, στο ποσοστό διάχυσης, στις χρηματοοικονομικές τριβές μεταξύ των συμμετεχόντων της αγοράς και, του χρόνου. Διεξάγοντας μια εκτεταμένη εμπειρική ανάλυση για την επίδραση της εισαγωγής και διάχυσης μιας χρηματοοικονομικής καινοτομίας στους συμμετέχοντες μιας αγοράς, τα ευρήματα της παρούσης διατριβής οδηγούν στο συμπέρασμα ότι η παραμετρική απεικόνιση που ακολουθείται για να δείξει την επίδραση της διάχυσης της χρηματοοικονομικής καινοτομίας έχει μια στατιστικά σημαντική επίπτωση στις αποδόσεις και τη μεταβλητότητα χρηματοοικονομικών και οικονομικών δεικτών.

Financial innovation is a process that is not fully understood because of ~ts nebulous nature and the difficulties in determining its causes and effects. The pace of financial innovation has increased rapidly in recent years. With this increased level of new financial instruments and processes has also come the realisation that financial innovation may well influence the successful application of monetary policy. Under certain circumstances monetary policy may hampered or may be rendered ineffective by financial innovation. This dissertation examines the nature and causes of financial innovation and its implication for the successful application of monetary policy both internationally and in South Africa. / Economics / M. Com (Economics)

Financial innovation is a process that is not fully understood because of ~ts nebulous nature and the difficulties in determining its causes and effects. The pace of financial innovation has increased rapidly in recent years. With this increased level of new financial instruments and processes has also come the realisation that financial innovation may well influence the successful application of monetary policy. Under certain circumstances monetary policy may hampered or may be rendered ineffective by financial innovation. This dissertation examines the nature and causes of financial innovation and its implication for the successful application of monetary policy both internationally and in South Africa. / Economics / M. Com (Economics)

The power of financial innovations to impact societies at global scales compels us to ask how innovation occurs, how it is governed and how to support the responsible initiation and emergence of such innovation in society. This thesis focuses on investigating and comparing current approaches to, and limitations of, the governance of financial innovation and perceptions of responsible financial innovation in three very different institutional settings: a large, global asset management company; a SME developing disruptive, technology - related platforms and services based on big data and associated analytics supporting customer relationship management in the banking and retail sectors; and a global insurance broker. To date there has been almost no published empirical research into the processes and governance of financial innovation in such corporate settings. The initial hypothesis that financial innovation is not governed (internally, externally) was not supported by the empirical data: rather these suggest the existence of formal and informal mechanisms for innovation governance. As suggested in the literature, financial innovation was observed to be largely incremental in nature and involve multiple stakeholders, co-ordinated internally by an ‘innovation owner’ (e.g. an individual, a group of individuals or a department). The research suggests that while there is broad statutory (regulation) and non-statutory governance of the financial sector, there is limited direct regulation of financial innovation per se. Despite this, contextual regulation (e.g. EU) and industry standards set an important governance frame within which innovation was observed to occur, complemented by a range of organizational innovation governance approaches, which ranged from completely informal, ad hoc (‘de facto’) processes to formal staging innovation management tools. It was not possible to generalize across sectors, emphasizing the need for more empirical work in other organizations in order to understand innovation management and governance across the financial sector as a whole. Responsible financial innovation is an emerging concept associated with a very small body of academic literature. The case study data show responsible financial innovation to be perceived as an ‘interpretively flexible umbrella’ term, underpinned by a value system that leads to quantifiable positive outputs (e.g. creating customer satisfaction). The research suggests that several ‘competencies’ (e.g. compliance, learning, communication, monitoring, and ownership) were perceived as relevant to responsible financial innovation by respondents. Themes emerging from the study mirrored to some extent the seven framings suggested by Armstrong et al. (2012) and Muniesa and Lenglet (2012) and the four dimensions of responsible innovation proposed by Owen et al. (2013); these however were very narrowly framed, especially with regard to second-order reflexivity (e.g. on the normative purposes and functions of finance in society). While dimensions of anticipation, reflection, deliberation and responsiveness (Owen et al., 2013) were evident to varying degrees in the cases these were narrowly configured (e.g. around ethics of data monetization, or on anticipation of operational risks), with deliberation often being internally focused, or including only a limited range of external stakeholders. These observations cause me to argue that current mechanisms for governing financial innovation are not sufficiently robust to support their responsible emergence in society. I conclude that any framework for responsible financial innovation should endeavor to broaden the scope for stakeholder engagement and make use of multi-level governance mechanisms (including committees in the innovation and governance process), while continuing to acknowledge the importance of contextual legislation in the framing of innovation trajectories. I recommend the initiation of a cross sector and independent institution for systematic financial innovations assessment, the establishment of formal cross-sector fora and communication channels to facilitate engagement with external stakeholders, and the codification of responsible financial innovation competencies into contextual legislation.

L’émergence de la micro-finance a été vue comme un remède pour un grand nombre de problèmes sociaux issus de la pauvreté en vertu de son efficacité dans l’octroi de crédits, dans l’amélioration de l’équité sociale ainsi que dans la réduction du niveau de pauvreté. Des millions de foyers en dessous du seuil de pauvreté n’ayant pas accès aux services bancaires ont ainsi pu accéder à des services financiers au travers de programmes de micro-finance. Cependant, le développement de la micro-finance ne suit pas un modèle identique pour tous les pays et les Institutions de Micro-finance (IMF) ont eu différents degrés de rentabilité. Beaucoup d’entre elles doivent encore faire face à des contraintes majeures pour fournir de manière efficace des services de micro-finance rentables. L’expansion des programmes de micro-finance reste un grand défi qui fait barrière au développement du secteur de cette dernière. Quelles pourraient être les raisons expliquant cette inefficience ?Cette thèse a pour but de contribuer à l’état des connaissances actuelles ainsi qu’aux recherches sur le développement et les caractéristiques du secteur de la micro-finance en analysant les facteurs stratégiques pouvant avoir un effet sur son développement dans le contexte du Vietnam.Pour ce faire, il sera appliqué à la fois des méthodes de recherche qualitatives et quantitatives.Nous effectuerons une analyse comparative entre l’innovation financière dans le système de micro-finance du Vietnam et deux modèles de référence internationaux : la Grameen Bank et la banque Rakyat d’Indonésie (BRI) afin de déterminer quelles contraintes limitent l’ampleur et la portée des activités de micro-finance au Vietnam ; quels types de modèles de microfinance sont adéquats : que cela soit pour des modèles commerciaux à but lucratif ou pour des projets de micro-finance sociale. Par ailleurs, des analyses empiriques seront portées par les techniques OLS et GMM afin d’examiner l’impact de l’environnement institutionnel ainsi que des facteurs macroéconomiques sur la rentabilité des IMF’s. Les résultats donnent la preuve d’une persistance de la rentabilité et de l’existence d’économies d’échelle en micro-finance. La qualité des prêts semble être un facteur déterminant concernant la rentabilité des IMF’s au Vietnam. Notre analyse confirme également le rôle important de l'État ainsi que le rôle décisif dans l'auto-innovation des institutions de microfinance. / The appearance of microfinance has been known as a remedy for many social ills rooted in poverty because of its efficacy in credit dispensation, social equality enhancement and reduction of poverty. Millions of poor and non-bankable people in developing countries have been provided access to formal financial services through microfinance programs. However, the development of microfinance is not a single model for all country and microfinance institutions (MFIs) have had various degree of sustainability. Many MFIs still face major constraints in their pursuit of effectively delivering microfinance services profitably. Expansion of microfinance programs remains a formidable challenge for the development of microfinance industry. What would be reasons for that inefficiency?This thesis seeks to contribute to the current state of knowledge and research thoroughly on the development and the characteristics of microfinance industry by investigating strategic factors affecting microfinance development in Vietnam context. It applies both qualitative and quantitative research methods.We develop comparative analysis between financial innovation of Vietnam microfinance system and two other international benchmarks namely Grameen Bank in Bangladesh and the Bank Rakyat of Indonesia (BRI) to figure out what constraints limit the scale and scope of Vietnam microfinance activities; what types of microfinance models are suitable: whether for-profit commercial models or social microfinance ventures in Vietnam context. Besides, empirical work is carried out using both OLS and GMM techniques to examine the impact of institutional environment as well as macroeconomic factors on MFIs’ profitability. The results present evidence on a dynamic role of profitability and economies of scale in microfinance. Loan quality seems to be a very important determinant of MFI’s profitability in Vietnam. Our analysis also confirms the significant role of State level as well as the decisive role in self-innovation of microfinance institutions.

The thesis is aimed to propose a financial innovation called COCONUT payment system. This innovative payment system is based on a combination of the cash and electronic money, presented as an ATM-like machine for purchase and payment execution, and operated via an electronic account, which allows its users to operate as a credit cards owner. This study commences with a review of the current major payment systems in the United States, followed by an analysis of the strength and weakness of these systems, and then proposes a payment system that combines the most popular two: cash and credit card with a healthier mechanism on financial control to both avoid the recurrence of financial crisis caused by credit crush and keep the current benefits. The COCOCNUT system can be applied not onbly to the market of the USA, but BRIC, developing and under seveloped countries’ market, those regions where cash remains the major payment way. As for the feasibility and the probability of promoting and applying this new system to replace the current systems or to implement in the new markets, the proposed COCONUT payment system, takes into consideration the differences of markets and regional regulations. The COCONUT project also provides trial calculations of its value proposition from the perspective of the project realization.

This study investigates the indicators of the number of ATMs (automated teller machines) in the provinces of Turkey by examining two banks: T.C. Ziraat Bankasi and T. iS Bankasi. The study depends on annual panel data from 1990 to 2004 for seventy-three provinces of Turkey. The information about the number of ATMs of the two banks is gathered after a study in the archives of the banks. In this study it is concluded that the number of ATMs of T. iS Bankasi and T. C. Ziraat Bankasi in the previous year and the total number of branches of the banks in Turkey are the indicators of ATM adoption for both of the banks concerned. However, population has a negative sign for T. C. Ziraat Bankasi which is a state bank whereas it has a positive sign for T. iS Bankasi which is a quasi-private bank. The findings also indicate that the ATM number of T. iS Bankasi is more sensitive to the number of total bank branches.