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Technological change, financial innovation, and diffusion in international banking

Published on November 30, 2015   21 min
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My name is Lawrence J. White. I'm a professor of economics at the Stern School of Business, New York University and I want to talk about technological change, financial innovation and diffusion in international banking.
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I'd like to start my talk with three quotations. The first is by a Nobel prize winning economist, Merton Miller, who back in 1986 wrote that, "The word 'revolution' is entirely appropriate for describing the changes in financial institutions and instruments that have occurred in the past 20 years." So here's Merton Miller, this Nobel prize winning economist as of 1986, looking back over 20 years saying, "Look at all the things that have happened. Look at all the changes. It's a revolution." And he was right. The problem is that even though everybody knows he's right, it's very hard actually to document this and it was true back in 1986, it turns out to be still true almost 30 years later. And so, to remind us of this phenomenon, my next quotation attributed to Mark Twain. "Everybody talks about the weather, but nobody does anything about it." And little over a decade ago, a co-author of mine, W. Scott Frame and I wrote the phrase, "Everybody talks about financial innovation, but almost nobody empirically tests hypotheses about it." We know it's there but it's real hard to document what's going on.
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Technological change, financial innovation, and diffusion in international banking

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