Publication Date: April 2004
Radical ﬁnancial innovation is the development of new institutions and methods that permit risk management to be extended far beyond its former realm, covering important new classes of risks. This paper compares past such innovation with potential future innovation, looking at the process that produced past success and the possibilities for future ﬁnancial innovation.
Risk management, Institutions, Incomplete markets, Livelihood insurance, Behavioral ﬁnance, Livelihood risks, Home equity insurance, Country risks
JEL Classification Codes: G10
Published in Eytan Sheshinski, Robert J. Strom and William J. Baumol, eds., Entrepreneurship, Innovation and the Growth Mechanism of the Free Market Economies, in Honor of William Baumol. Princeton University Press, 2006, pp. 306-323