Financial innovation: diversity of definitions and difficulty of measurement

Abstract

Although the subject of financial innovation has been the subject of several debates and theoretical approaches, its empirical studies are still relatively rare. This shortage seems to be attributed to the lack of a universal measure that applies to any study. We are facing difficulties in constituting such a measure. This state of affairs has prompted us to question the causes behind this difficulty since this concept represents the subject of reflection and discussion by many authors today. This seems to be due to its involvement in the stability of contemporary economic and financial systems.

According to our investigations, we were able to observe the existence of several factors which make it difficult to constitute a unified measure. These concern the complexities and diversities inherent in financial innovation, and mainly the diversity of its definitions, characteristics, and forms. Given that situation, a panorama of measurement indicators has been adopted by the researchers to better carry out their research work.

Consequently, the objective of this article is to highlight and analyze the elements at the origin of the difficulty of measuring financial innovation as well as the various measurement indicators retained in the literature.