Technological Change, Financial Innovation, And Diffusion In Banking

This paper discusses the technological change and financial innovation that commercial banking has experienced during the past twenty-five years. The paper first describes the role of the financial system in economies and how technological change and financial innovation can improve social welfare. The authors then survey the literature relating to several specific financial innovations, which they define as new products or services, production processes, or organizational forms. They find that the past quarter century has been a period of substantial change in terms of banking products, services, and production technologies.