Briefly describe the main types of financial innovation.

Financial innovation refers to new things created or introduced through the reorganization and creative changes of various elements within finance. And that financial innovation can be roughly divided into seven categories:

(1) financial system innovation; (2) Financial market innovation (3) Financial products innovation (4) Financial institutions innovation (5) Financial resources innovation (6) Financial technology innovation (7) Financial management innovation.

(1) financial system innovation

A country's financial system always evolves with the changes of political, economic, credit system, financial policy and other financial environments. This evolution is not only a structural change, but also an essential change in a sense.

Financial system innovation includes the reform and development of financial organization system, supervision system and market system. It affects and determines the financial property rights, credit system, financial subject behavior and financial market mechanism and other aspects of the situation and operation quality.

(2) Financial market innovation

Financial market innovation mainly means that bank operators develop new markets according to the opportunities brought by the operating environment in a certain period of time. Modern financial markets generally include:

1. Differentiated markets, such as money market, foreign exchange market, capital market, gold market, securities market, mortgage market and insurance market.

2. The aging market, divided by duration, includes short-term capital borrowing market, bill discount market, short-term borrowing market and short-term bond market. There are long-term capital markets, such as long-term bond market and stock market.

3. Regional markets, such as domestic financial markets and international financial markets. Financial market innovation mainly refers to the opening up of new financial markets by microeconomic entities or the establishment of new financial markets by macroeconomic entities.

Due to the transition and transformation from financial market to advanced financial market, closed financial market has entered and expanded to open financial market.

(3) Financial product innovation

The core of financial products is the function of meeting demand, including financial instruments and banking services. The form of financial products is the type, characteristics, methods, quality and reputation of products required by customers, which makes customers convenient, safe and profitable. In the international financial market, most financial innovations belong to the innovation of financial products.

(4) Innovation of financial institutions

The innovation of financial institutions is based on the content and characteristics of financial innovation management, aiming at creating new operating institutions and establishing a complete system.

(5) financial resources innovation

Financial resources refer to talents, funds, finance, information, etc. It is a necessary prerequisite to ensure the normal operation of banks. The innovation of financial resources mainly includes the following aspects:

1. Source innovation of financial resources. First of all, the normal operation of the financial industry must have specialized talents. The sources of talents include cultivating and absorbing senior talents from other institutions and introducing foreign senior professionals.

Secondly, there must be sufficient sources of funds, which requires the operators of financial institutions to keep abreast of the dynamics of the capital supply market, explore and seek new channels of capital supply, and open up new debt business.

2. Structural innovation of financial resources. The structure of financial resources includes timely and accurate information, large proportion of senior professionals, reasonable debt structure and advanced financial management. It can create business efficiency and methods ahead of peers.

3. Innovation of financing methods. There are different ways to attract and gather different financial resources, so bank operators should constantly create new means, gather the financial resources they need in the most economical and effective way, and rationally allocate these resources in order to maximize the benefits in their operations.

(6) Financial science and technology innovation

Financial technological innovation and financial liberalization since 1970s. Mainly reflected in banks and non-bank financial institutions, financial services pay attention to speed and efficiency, and the application of science and technology in the financial field has had an epoch-making impact on financial business.

On the one hand, it has narrowed the distance between the financial market in time and space, on the other hand, it has diversified and internationalized financial services.

(7) Financial management innovation

The innovative mechanism of financial management includes two aspects: on the one hand, the state indirectly manages the financial industry through legislation, with the goal of stabilizing the currency and developing the economy;

On the other hand, the internal management of financial institutions should establish a sound internal control mechanism, including institutional management, credit fund management, investment risk management, financial management, labor and personnel management, etc.

At present, the management of financial institutions focuses on restricting the use of funds through the source of funds, realizing the dynamic balance of the total amount and structure of both banks' assets and liabilities, and constantly creating new management methods.

Extended data:

form

According to this view, innovation includes technological innovation (product innovation and process innovation) and organizational management innovation, because both of them can lead to changes in production function or supply function. Specifically, innovation includes five situations:

The emergence of new products; Application of new technology; Development of new resources; Development of new markets; The establishment of new production organization and management mode is also called organizational innovation.

Although most definitions of financial innovation come from Schumpeter's concept of economic innovation, the connotation of each definition is quite different. To sum up, the understanding of financial innovation is nothing more than three levels.

Macro instruction level

Macro-level financial innovation equates financial innovation with major historical changes in financial history, and holds that the development history of the whole financial industry is a history of continuous innovation, and every major development of the financial industry cannot be separated from financial innovation.

Understanding financial innovation from this level has the following characteristics: the time span of financial innovation is long, the whole history of money and credit development is regarded as the history of financial innovation, and every major breakthrough in the history of financial development is regarded as financial innovation;

Financial innovation covers a wide range, including not only financial technology innovation and financial market innovation; Financial services, products, organizational management innovation of financial enterprises, and structural innovation of financial services.

It also includes the changes in banking business, bank payment and clearing system, bank asset and liability management, financial institutions, financial markets, financial system and international monetary system since the emergence of modern banks.

Such a long historical span and such a broad research space make the research on financial innovation unattainable.

Mesoscopic level

The meso-level financial innovation refers to the changes in the intermediary functions of financial institutions, especially banks, since the late 1950s and early 1960s, which can be divided into technological innovation, product innovation and institutional innovation. Technological innovation refers to manufacturing new products.

The process of adopting new production factors or reorganizing factors, production methods and management systems. Product innovation refers to the process that product suppliers produce new products with better performance and quality than traditional products.

Institutional innovation means that the formation and function of a system have changed. And improve the efficiency of the system.

From this perspective, financial innovation can be defined as a process in which the government, financial authorities and financial institutions create and combine a new and efficient capital operation mode or operation system in order to adapt to the changes in the economic environment and the inherent contradictions in the financial process, prevent or transfer operational risks, reduce costs, and better realize the goals of liquidity, safety and profitability.

The concept of financial innovation at the meso level not only limits the research time after the 1960s, but also has a clear connotation. Therefore, most researches on financial innovation theory adopt this concept.

Microscopic level

Micro-level financial innovation only refers to the innovation of financial instruments. It can be roughly divided into four types: credit innovation, such as short-term credit to achieve medium-term credit. And disperse investors to bear the loan risks alone;

Risk transfer innovation, including various new tools that can transfer the inherent risks of financial instruments between economic institutions, such as currency swap and interest rate swap;

Increase liquidity innovation, including new financial instruments that can improve the liquidity and convertibility of the original financial instruments, such as long-term loan securitization; Equity creation and innovation, including all kinds of new financial instruments that convert creditor's rights into equity, such as bonds with equity subscription.

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