Historical Review of Financial Engineering in the Financial Service Industry

서지정보

· 발행기관 : 한국경영사학회
· 수록지 정보 : 경영사연구 / 28권 / 1호 / 183 ~ 197페이지
· 저자명 : 손판도

초록

This paper historically reviews the financial engineering which is rapidly growing in financial industry over the world. Over the past two decades, financial field has been rapidly brought revolutionary changes in financial instruments, financial innovations and processes as well as applied mathematics. Due to the deregulation of the financial services industry in recent time, new financial products to meet the need of the financial customers are required. Thus new design of financial product has to be made in financial industry. Therefore, the role of financial engineering which provides the customer oriented product is an important contribution. I expect that this review of financial engineering will be big contribution in future developments and applications of many financial fields and even applied mathematics.
I think that new financial product and market design, improved computer and telecommunications technology that advances in the financial engineering field during the past quarter-century have led to dramatic and rapid changes in the structure of global financial markets and institutions. The scientific breakthroughs in financial engineering were shaped by the extraordinary flow of financial innovation, which coincided with those changes. I find that the cumulative impact has significantly affected all of us-as users, producers, or overseers of the financial system. Indeed, in providing the means for pricing and risk measurement of derivative securities, finance engineering has contributed fundamentally to the remarkable rate of globalization of the financial system. Financial engineers who designed derivative securities to function as adapters made this possible in large part. In general, the flexibility created by the widespread use of derivatives as well as specialized institutional designs provided as effective offset to dysfunctional country specific institutional rigidities. Financial innovation is a central force driving the financial system toward greater economic efficiency with considerable economic benefit having accrued from the changes over the past several decades. Mostly people suggest that financial innovations can be grouped as new products, new services, new production processes, and new organizational form. I document that factors for financial innovation are volatile financial environment due to inflation, technology, changes in the regulatory environment, and changes in perceived market conditions.

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