THE THEORY OF FINANCIAL INNOVATIONS. A CRITICAL REVIEW OF PRINCIPAL APPROACHES

Abstract

In times of crises, attempts are often made to blame all the troubles on financial innovations and reconsider their role in the progress. At the same time scientific publications also discuss positive aspects of financial innovations. The paper makes a critical analysis of the impact of financial innovation options on the financial system balance with account for expectations and behavior of market players. The research compares different views on the role and place of innovations in finance, their contribution to the stabilization or undermining of the economy. At the World Economic Forum, it was agreed that none of numerous definitions are able to fully cover the complexity of innovations in the sphere of financial services where a new product can combine a variety of functions, including circulation, organization form, marketing, customer context, and develop the supporting infrastructure. However, the definition was necessary. On its basis a number of clarifications and constructions were made: the transition to various theoretical schemes was performed; the adaptability of markets and countries to the risks associated with financial innovations was assessed; preparations for restructuring of the organizational structures, management mechanisms, technological processes were made to minimize undesirable effects and improve the positive impact of innovations.