Financial innovation

Financial innovation is the act of creating new financial instruments as well as new financial technologies, institutions, and markets. Recent financial innovations include hedge funds, private equity, weather derivatives, retail-structured products, exchange-traded funds, multi-family offices, and Islamic bonds (Sukuk). The shadow banking system has spawned an array of financial innovations including mortgage-backed securities products and collateralized debt obligations (CDOs).[1]

There are 3 categories of innovation: institutional, product, and process. Institutional innovations relate to the creation of new types of financial firms such as specialist credit card firms like Capital One, electronic trading platforms such as Charles Schwab Corporation, and direct banks. Product innovation relates to new products such as derivatives, securitization, and foreign currency mortgages. Process innovations relate to new ways of doing financial business, including online banking and telephone banking.[1]


Economic theory has much to say about what types of securities should exist, and why some may not exist (why some markets should be "incomplete") but little to say about why new types of securities should come into existence.

One interpretation of the Modigliani-Miller theorem is that taxes and regulation are the only reasons for investors to care what kinds of securities firms issue, whether debt, equity, or something else. The theorem states that the structure of a firm's liabilities should have no bearing on its net worth (absent taxes). The securities may trade at different prices depending on their composition, but they must ultimately add up to the same value.

Furthermore, there should be little demand for specific types of securities. The capital asset pricing model, first developed by Jack L. Treynor and William F. Sharpe, suggests that investors should fully diversify and their portfolios should be a mixture of the "market" and a risk-free investment. Investors with different risk/return goals can use leverage to increase the ratio of the market return to the risk-free return in their portfolios. However, Richard Roll argued that this model was incorrect, because investors cannot invest in the entire market. This implies there should be demand for instruments that open up new types of investment opportunities (since this gets investors closer to being able to buy the entire market), but not for instruments that merely repackage existing risks (since investors already have as much exposure to those risks in their portfolio).

If the world existed as the Arrow-Debreu model posits, then there would be no need for financial innovation. The model assumes that investors are able to purchase securities that pay off if and only if a certain state of the world occurs. Investors can then combine these securities to create portfolios that have whatever payoff they desire. The fundamental theorem of finance states that the price of assembling such a portfolio will be equal to its expected value under the appropriate risk-neutral measure.

Academic literatureEdit

Tufano (2003) and Duffie and Rahi (1995) provide useful reviews of the literature.

The extensive literature on principal–agent problems, adverse selection, and information asymmetry points to why investors might prefer some types of securities, such as debt, over others like equity. Myers and Majluf (1984) develop an adverse selection model of equity issuance, in which firms (which are trying to maximize profits for existing shareholders) issue equity only if they are desperate. This was an early article in the pecking order literature, which states that firms prefer to finance investments out of retained earnings first, then debt, and finally equity, because investors are reluctant to trust any firm that needs to issue equity.

Duffie and Rahi also devote a considerable section to examining the utility and efficiency implications of financial innovation. This is also the topic of many of the papers in the special edition of the Journal of Economic Theory in which theirs is the lead article. The usefulness of spanning the market appears to be limited (or, equivalently, the disutility of incomplete markets is not great).

Allen and Gale (1988) is one of the first papers to endogenize security issuance contingent on financial regulation—specifically, bans on short sales. In these circumstances, they find that the traditional split of cash flows between debt and equity is not optimal, and that state-contingent securities are preferred. Ross (1989) develops a model in which new financial products must overcome marketing and distribution costs. Persons and Warther (1997) studied booms and busts associated with financial innovation.

The fixed costs of creating liquid markets for new financial instruments appears to be considerable. Black and Scholes (1974) describe some of the difficulties they encountered when trying to market the forerunners to modern index funds. These included regulatory problems, marketing costs, taxes, and fixed costs of management, personnel, and trading. Shiller (2008) describes some of the frustrations involved with creating a market for house price futures.


Spanning the marketEdit

Some types of financial instrument became prominent after macroeconomic conditions forced investors to be more aware of the need to hedge certain types of risk.

Mathematical innovationEdit

Futures, options, and many other types of derivatives have been around for centuries: the Japanese rice futures market started trading around 1730. However, recent decades have seen an explosion use of derivatives and mathematically complicated securitization techniques. From a sociological point of view, some economists argue that mathematical formulas actually change the way that economic agents use and price assets. Economists, rather than acting as a camera taking an objective picture of the way the world works, actively change behavior by providing formulas that let dispersed agents agree on prices for new assets.[3] See Exotic derivative, Exotic option.

Avoiding taxes and regulationEdit

Miller (1986) placed great emphasis on the role of taxes and government regulation in stimulating financial innovation.[4] The Modigliani-Miller theorem explicitly considered taxes as a reason to prefer one type of security over another, despite that corporations and investors should be indifferent to capital structure in a fractionless world.

The development of checking accounts at U.S. banks was in order to avoid punitive taxes on state bank notes that were part of the National Banking Act.

Some investors use total return swaps to convert dividends into capital gains, which are taxed at a lower rate.[5]

Many times, regulators have explicitly discouraged or outlawed trading in certain types of financial securities. In the United States, gambling is mostly illegal, and it can be difficult to tell whether financial contracts are illegal gambling instruments or legitimate tools for investment and risk-sharing. The Commodity Futures Trading Commission (CFTC) is in charge of making this determination. The difficulty that the Chicago Board of Trade faced in attempting to trade futures on stocks and stock indexes is described in Melamed (1996).

In the United States, Regulation Q drove several types of financial innovation to get around its interest rate ceilings, including eurodollars and NOW accounts.

Role of technologyEdit

Some types of financial innovation are driven by improvements in computer and telecommunication technology. For example, Paul Volcker suggested that for most people, the creation of the ATM was a greater financial innovation than asset-backed securitization.[6] Other types of financial innovation affecting the payments system include credit and debit cards and online payment systems like PayPal.

These types of innovations are notable because they reduce transaction costs. Households need to keep lower cash balances—if the economy exhibits cash-in-advance constraints then these kinds of financial innovations can contribute to greater efficiency. One study of Italian households' use of debit cards found that ownership of an ATM card resulted in benefits worth €17 annually.[7]

These types of innovations may also affect monetary policy by reducing real household balances. Especially with the increased popularity of online banking, households are able to keep greater percentages of their wealth in non-cash instruments. In a special edition of International Finance devoted to the interaction of e-commerce and central banking, Goodhart (2000) and Woodford (2000) express confidence in the ability of a central bank to maintain its policy goals by affecting the short-term interest rate even if electronic money has eliminated the demand for central bank liabilities,[8][9] while Friedman (2000) is less sanguine.[10]

A 2016 PwC report pointed to the "accelerating pace of technological change" as the "most creative force—and also the most destructive—in the financial services ecosystem".[11]


Financial innovations may influence economic or financial systems. For instance, financial innovation may affect monetary policy effectiveness and the ability of central banks to stabilize the economy. The relationship between money and interest rates, which can define monetary policy effectiveness, is affected by financial innovation. Financial innovation also influences firm profitability, transactions, and social welfare.[12]


Some economists argue that financial innovation has little to no productivity benefit: Paul Volcker stated that "there is little correlation between sophistication of a banking system and productivity growth",[6] that there is no "neutral evidence that financial innovation has led to economic growth",[13] and that financial innovation was a cause of the financial crisis of 2007–2010,[14] while Paul Krugman states that "the rapid growth in finance since 1980 has largely been a matter of rent-seeking, rather than true productivity".[15]

Notable historical modelsEdit

Pre-modern Italian maritime republics and city-statesEdit

Dutch RepublicEdit

Courtyard of the Amsterdam Stock Exchange (or Beurs van Hendrick de Keyser in Dutch), the world's first official stock exchange. The formal stock market, in its modern sense, was an institutional innovation by the VOC managers and shareholders in the early 17th century.

In the 17th century, Amsterdam became the leading commercial and financial centre of the world. It held this position for more than a century,[16][17][18] and was the first modern model of an international financial centre.[19] As Richard Sylla (2015) noted, "In modern history, several nations had what some of us call financial revolutions. These can be thought of as creating in a short period of time all the key components of a modern financial system. The first was the Dutch Republic four centuries ago."[20][21][22] Amsterdam – unlike its predecessors such as Bruges, Antwerp, Genoa, and Venice – controlled crucial resources and markets directly, sending its fleets to all quarters of the world.[23]

From about the early 1600s to about the mid-18th century, the Dutch Republic's economic and financial system were the most advanced and sophisticated ever seen in history.[24][25][26][27] For example, as Jacob Soll (2014) noted, "with the complexity of the stock exchange, [17th-century] Dutch merchants' knowledge of finance became more sophisticated than that of their Italian predecessors or German neighbors."[27] Historically, the Dutch were responsible for at least four major pioneering institutional innovations[a] (in economic, business and financial history of the world):

In many respects, the Dutch Republic's pioneering institutional innovations greatly helped revolutionize and shape the foundations of the economic and financial system of the modern-day world, and significantly influenced many English-speaking countries, especially the United Kingdom and United States.[62][63][64]

See alsoEdit


  1. ^ Inventions and innovations whose earliest known fully functioning historical models were first effectively institutionalized and operated by the peoples of the Netherlands.
  2. ^ It is important to note the difference between a "corporation" and a "company" in general, hence the difference between a "multinational corporation" and a "multinational company" in its modern sense.
  3. ^ The concept of the bourse (or the exchange) was 'invented' in the medieval Low Countries, most notably in predominantly Dutch-speaking cities like Bruges and Antwerp, before the birth of formal stock exchanges in the 17th century. From Flemish cities the term 'beurs' spread to other European states where it was corrupted into 'bourse', 'borsa', 'bolsa', 'börse', etc. In Britain, too, the term 'bourse' was used between 1550 and 1775, eventually giving way to the term 'royal exchange'. Until the early 1600s, a bourse was not exactly a stock exchange in its modern sense. With the founding of the Dutch East India Company (VOC) in 1602 and the rise of Dutch capital markets in the early 17th century, the 'old' bourse (a place to trade commodities, government and municipal bonds) found a new purpose – a formal exchange that specialize in creating and sustaining secondary markets in the securities (such as bonds and shares of stock) issued by corporations – or a stock exchange as we know it today.[39]


  1. ^ a b "Definition of Financial Innovation". Financial Times. Archived from the original on February 12, 2018. Retrieved February 11, 2018.
  2. ^ David X. Li (2000). "On Default Correlation: A Copula Function Approach" (PDF). Journal of Fixed Income. 9 (4): 43–54. CiteSeerX doi:10.2139/ssrn.187289.
  3. ^ MacKenzie, Donald (2008). An Engine, Not a Camera: How Financial Models Shape Markets. Boston: MIT Press. ISBN 9780262250047.
  4. ^ Miller, Merton H. (1986). "Financial Innovation: The Last Twenty Years and the Next". The Journal of Financial and Quantitative Analysis. 21 (4): 459–471. doi:10.2307/2330693. JSTOR 2330693.
  5. ^
  6. ^ a b "Crisis may be worse than Depression, Volcker says", Reuters, February 20, 2009
  7. ^ Alvarez, Fernando; Francesco Lippi (2009). "Financial Innovation and the Transactions Demand for Cash" (PDF). Econometrica. 77 (2): 363–402. doi:10.3982/ECTA7451. S2CID 17298975.
  8. ^ Goodhart, Charles A. E. (2000). "Can Central Banking Survive the IT Revolution?". International Finance. 3 (2): 189–209. doi:10.1111/1468-2362.00048.
  9. ^ Michael Woodford (2000). "Monetary Policy in a World Without Money" (PDF). International Finance. 3 (2): 229–260. doi:10.1111/1468-2362.00050.
  10. ^ Benjamin M. Friedman (July 2000). "Decoupling at the Margin: The Threat to Monetary Policy from the Electronic Revolution in Banking" (PDF). International Finance. 3 (2): 261–272. doi:10.1111/1468-2362.00051.
  11. ^ Financial Services Technology 2020 and Beyond: Embracing Disruption (PDF). PwC. 2016.
  12. ^ Lerner, J.; Tufano, P. (2011). "The Consequences of Financial Innovation: A Counterfactual Research Agenda". Annual Review of Financial Economics. 3: 41–85. doi:10.1146/ SSRN 1759852.
  13. ^ Patrick Hosking and Suzy Jagger,"'Wake up, gentlemen', world's top bankers warned by former Fed chairman Volcker", The Times of London, December 9, 2009
  14. ^ Tim Iacono, "Paul Volcker: ATM Was the Peak of Financial Innovation", Seeking Alpha December 9, 2009.
  15. ^ Paul Krugman, Darling, "I love you", The Conscience of a Liberal, The New York Times, December 9, 2009
  16. ^ Kennedy, Paul (1989). The Rise and Fall of the Great Powers
  17. ^ Bindemann, Kirsten (1999). The Future of European Financial Centres
  18. ^ Cassis, Youssef (2010). Capitals of Capital: The Rise and Fall of International Financial Centres 1780–2009. Translated by Jacqueline Collier. (Cambridge University Press, 2010), p. 9
  19. ^ Wu, Wei Neng (February 26, 2014). "Hub Cities – London: Why did London lose its preeminent port hub status, and how has it continued to retain its dominance in marine logistics, insurance, financing and law? (Civil Service College of Singapore)". Civil Service College Singapore ( Retrieved February 26, 2017. As Wu Wei Neng (2012) notes: "17th century Amsterdam was the world's first modern financial centre – the city hall, Wisselbank, Beurs (stock exchange), Korenbeurs (commodities exchange), major insurance, brokerage and trading companies were located within a few blocks of each other, along with coffee houses which served as informal trading floors and exchanges that facilitated deal-making. Financial innovations such as maritime insurance, retirement pensions, annuities, futures and options, transnational securities listings, mutual funds and modern investment banking had their genesis in 17th and 18th century Amsterdam."[dead link]
  20. ^ Sylla, Richard (2015). "Financial Development, Corporations, and Inequality". (BHC-EBHA Meeting)
  21. ^ Gelderblom, Oscar; Jonker, Joost (2004). "Completing a Financial Revolution: The Finance of the Dutch East India Trade and the Rise of the Amsterdam Capital Market, 1595–1612". The Journal of Economic History. 64 (3): 641–72. doi:10.1017/S002205070400292X. hdl:1874/386215. S2CID 54700710.
  22. ^ Tracy, James D.: A Financial Revolution in the Habsburg Netherlands: Renten and Renteniers in the County of Holland, 1515–1565. (University of California Press, 1985, 300 pp)
  23. ^ Taylor, Bryan (December 8, 2013). "How 3 Countries Lost Their Position As The World's Dominant Financial Power Over The Last 800 Years". Global Financial Data. Retrieved May 14, 2014.
  24. ^ In Karl Marx's own words, "Its [17th-century Dutch Republic's] fisheries, marine, manufactures, surpassed those of any other country. The total capital of the Republic was probably more important than that of all the rest of Europe put together." (Das Kapital)
  25. ^ Kaletsky, Anatole: Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis. (PublicAffairs, 2010), pp. 109–10. Anatole Kaletsky: "The bursting of the tulip bubble in 1637 did not end Dutch economic hegemony. Far from it. Tulipmania was followed by a century of Dutch leadership in almost every branch of global commerce, finance, and manufacturing."
  26. ^ Gieseking, Jen Jack; Mangold, William; et al.: The People, Place, and Space Reader. (Routledge, 2014, ISBN 978-0415664974), p. 151. As Witold Rybczynski (1987) notes, the 17th-century Dutch Republic "had few natural resources—no mines, no forests—and what little land there was needed constant protection from the sea. But this "low" country surprisingly quickly established itself as a major power. In a short time it became the most advanced shipbuilding nation in the world and developed large naval, fishing, and merchant fleets. (...) The Netherlands introduced many financial innovations that made it a major economic force—and Amsterdam became the world center for international finance. Its manufacturing towns grew so quickly that by the middle of the century the Netherlands had supplanted France as the leading industrial nation of the world."
  27. ^ a b Soll, Jacob: The Reckoning: Financial Accountability and the Making and Breaking of Nations. (New York: Basic Books, 2014)
  28. ^ Wilson, Eric Michael: The Savage Republic: De Indis of Hugo Grotius, Republicanism and Dutch Hegemony within the Early Modern World-System (c.1600–1619). (Martinus Nijhoff, 2008, ISBN 978-9004167889), p. 215–217. Eric Michael Wilson (2008): "The defining characteristics of the modern corporation, all of which emerged during the Dutch cycle, include: limited liability for investors, free transferability of investor interests, legal personality and centralised management. Although some of these characteristics were present to a certain extent in the fourteenth-century Genoese societas comperarum of the first cycle, the first wholly cognisable modern limited liability public company was the VOC."
  29. ^ Funnell, Warwick; Robertson, Jeffrey: Accounting by the First Public Company: The Pursuit of Supremacy. (Routledge, 2013, ISBN 0415716179)
  30. ^ a b Sayle, Murray (April 5, 2001). "Japan goes Dutch". London Review of Books. 23 (7). pp. 3–7. Murray Sayle (2001): "The Netherlands United East Indies Company (Verenigde Oostindische Compagnie, or VOC), founded in 1602, was the world's first multinational, joint-stock, limited liability corporation – as well as its first government-backed trading cartel. Our own East India Company, founded in 1600, remained a coffee-house clique until 1657, when it, too, began selling shares, not in individual voyages, but in the Company itself, by which time its Dutch rival was by far the biggest commercial enterprise the world had known."
  31. ^ Phelan, Ben (January 7, 2013). "Dutch East India Company: The World's First Multinational". Retrieved March 18, 2018.
  32. ^ Taylor, Bryan (November 6, 2013). "The Rise and Fall of the Largest Corporation in History". Business Insider. Retrieved March 18, 2018.
  33. ^ Brook, Timothy: Vermeer's Hat: The Seventeenth Century and the Dawn of the Global World. (Bloomsbury Press, 2008, pp. 288, ISBN 978-1596915992)
  34. ^ Partridge, Matthew (March 20, 2015). "This day in history: 20 March 1602: Dutch East India Company formed". MoneyWeek. Retrieved May 20, 2018.
  35. ^ Grenville, Stephen (November 3, 2017). "The first global supply chain". Lowy Institute. Retrieved May 28, 2018.
  36. ^ Molavi, Afshin (March 12, 2017). "The Netherlands was once a liberal force for globalization. Has the country lost its way?". The Washington Post ( Retrieved July 7, 2017.
  37. ^ Earl, Steve (October 29, 2012). "Dutch courage: modern PR lessons from the world's first corporation". Zeno Group ( Archived from the original on August 7, 2017. Retrieved July 7, 2017.
  38. ^ a b Macaulay, Catherine R. (2015), 'Capitalism's renaissance? The potential of repositioning the financial 'meta-economy,'. Futures 68: 5–18. doi:10.1016/j.futures.2014.10.016. As Catherine Macaulay (2015) notes, "(...) Meanwhile in England, the EIC repeatedly issued new bonds for the term of single voyages until 1657 and each of the six fleets sailing between 1610 and 1612 provided a profit between 50 and 200% (Dari-Mattiacci et al., 2013, p. 18). (...) The EIC's bond format, used successfully for over 50 years, has been criticised for preventing capital accumulation as bonds were liquidated quickly after each voyage and a new company effectively established for the next expedition. (...) The evolution of company bonds, adapting arrangements to suit new goals, was cut short when the EIC adopted the VOC share model in 1657."
  39. ^ Neal, Larry (2005). "Venture Shares of the Dutch East India Company", in Goetzmann & Rouwenhorst (eds.), pp. 165–175
  40. ^ "Amsterdam: Where It All Began". (Index Fund Advisors, Inc.). August 12, 2012. Retrieved January 21, 2017.
  41. ^ Brooks, John: The Fluctuation: The Little Crash in '62, in Business Adventures: Twelve Classic Tales from the World of Wall Street. (New York: Weybright & Talley, 1968)
  42. ^ Stringham, Edward Peter; Curott, Nicholas A.: On the Origins of Stock Markets [Part IV: Institutions and Organizations; Chapter 14], pp. 324–344, in The Oxford Handbook of Austrian Economics, edited by Peter J. Boettke and Christopher J. Coyne. (Oxford University Press, 2015, ISBN 978-0199811762). Edward P. Stringham & Nicholas A. Curott: "Business ventures with multiple shareholders became popular with commenda contracts in medieval Italy (Greif, 2006, p. 286), and Malmendier (2009) provides evidence that shareholder companies date back to ancient Rome. Yet the title of the world's first stock market deservedly goes to that of seventeenth-century Amsterdam, where an active secondary market in company shares emerged. The two major companies were the Dutch East India Company and the Dutch West India Company, founded in 1602 and 1621. Other companies existed, but they were not as large and constituted a small portion of the stock market (Israel [1989] 1991, 109–112; Dehing and 't Hart 1997, 54; dela Vega [1688] 1996, 173)."
  43. ^ Neal, Larry (2005). "Venture Shares of the Dutch East India Company",, in The Origins of Value: The Financial Innovations that Created Modern Capital Markets, Goetzmann & Rouwenhorst (eds.), Oxford University Press, 2005, pp. 165–175
  44. ^ Petram, Lodewijk: The World's First Stock Exchange: How the Amsterdam Market for Dutch East India Company Shares Became a Modern Securities Market, 1602–1700. Translated from the Dutch by Lynne Richards. (Columbia University Press, 2014, ISBN 9780231163781)
  45. ^ Shiller, Robert (2011). Economics 252, Financial Markets: Lecture 4 – Portfolio Diversification and Supporting Financial Institutions (Open Yale Courses) [Transcript]
  46. ^ Murphy, Richard McGill (July 1, 2014). "Is Asia the next financial center of the world?". Retrieved March 13, 2018.
  47. ^ De la Vega, Joseph: Confusión de confusiones (1688): Portions Descriptive of the Amsterdam Stock Exchange. Selected and translated by Hermann Kellenbenz. (Cambridge, MA: Baker Library, Harvard Graduate School of Business Administration, 1957)
  48. ^ Quinn, Stephen; Roberds, William (2005). The Big Problem of Large Bills: The Bank of Amsterdam and the Origins of Central Banking. Federal Reserve Bank of Atlanta (Working Paper 2005–16)
  49. ^ Quinn, Stephen; Roberds, William: An Economic Explanation of the Early Bank of Amsterdam, Debasement, Bills of Exchange, and the Emergence of the First Central Bank. Federal Reserve Bank of Atlanta (Working Paper 2006–13), 2006
  50. ^ Van Nieuwkerk, Marius (ed.): The Bank of Amsterdam: On the Origins of Central Banking. (Amsterdam: Sonsbeek Publishers, 2009)
  51. ^ Kuzminski, Adrian: The Ecology of Money: Debt, Growth, and Sustainability. (Lexington Books, 2013), p. 38
  52. ^ Quinn, Stephen; Roberds, William (2007). The Bank of Amsterdam and the Leap to Central Bank Money. American Economic Review Papers and Proceedings 97, p262-5
  53. ^ Quinn, Stephen; Roberds, William (2008). Domestic Coinage and the Bank of Amsterdam. (August 2008 Draft of Chapter 7 of the Wisselbankboek)
  54. ^ Quinn, Stephen; Roberds, William (2010). How Amsterdam Got Fiat Money. (Working Paper 2010–17, December 2010)
  55. ^ Quinn, Stephen; Roberds, William (2012). The Bank of Amsterdam through the Lens of Monetary Competition. (Working Paper 2012–14, September 2012)
  56. ^ Quinn, Stephen; Roberds, William (2014). Death of a Reserve Currency, Atlanta Fed Working Paper 2014–17
  57. ^ Gillard, Lucien: La Banque d'Amsterdam et le florin européen au temps de la République néerlandaise, 1610–1820. (Paris: Editions de l'Ecole des Hautes Etudes en Sciences Sociales, 420 p., 2004)
  58. ^ Goetzmann, William N.; Rouwenhorst, K. Geert (2005). The Origins of Value: The Financial Innovations that Created Modern Capital Markets. (Oxford University Press, ISBN 978-0195175714))
  59. ^ Goetzmann, William N.; Rouwenhorst, K. Geert (2008). The History of Financial Innovation, in Carbon Finance, Environmental Market Solutions to Climate Change. (Yale School of Forestry and Environmental Studies, chapter 1, pp. 18–43). As Goetzmann & Rouwenhorst (2008) noted, "The 17th and 18th centuries in the Netherlands were a remarkable time for finance. Many of the financial products or instruments that we see today emerged during a relatively short period. In particular, merchants and bankers developed what we would today call securitization. Mutual funds and various other forms of structured finance that still exist today emerged in the 17th and 18th centuries in Holland."
  60. ^ Goetzmann, William N.; Rouwenhorst, K. Geert (2005). The Origins of Value: The Financial Innovations that Created Modern Capital Markets. (Oxford University Press, ISBN 978-0195175714))
  61. ^ K. Geert Rouwenhorst (December 12, 2004), "The Origins of Mutual Funds", Yale ICF Working Paper No. 04-48.
  62. ^ Mead, Walter Russell (April 18, 2009). "Walter Russell Mead on Why Lula Was Right (The Debt We Owe the Dutch: Blue-Eyed Bankers Have Given Us More Than the Current Financial Crisis)". Newsweek Magazine ( Retrieved January 28, 2021. Walter Russell Mead (2009): "[...] The modern financial system grows out of a series of innovations in 17th-century Netherlands, and the Dutch were, on the whole, as Lula describes them. From the Netherlands, what the English called "Dutch finance" traveled over the English Channel, as the English borrowed Dutch ideas to build a stock market, promote global trade and establish the Bank of England..."
  63. ^ Dore, Ronald: Stock Market Capitalism, Welfare Capitalism: Japan and Germany versus the Anglo-Saxons. (Oxford University Press, 2000) ISBN 978-0199240616
  64. ^ Sobel, Andrew C.: Birth of Hegemony: Crisis, Financial Revolution, and Emerging Global Networks. (Chicago: University of Chicago Press, 2012)


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