Value of Innovation in the Financial Market
Details
- Authors: Bruins, Roel
- Title: Value of Innovaiton in the Financial Market
- First supervisor: Prof. Dr. J.R.O. Osterrieder
- Second supervisor: Prof. Dr. M.R. Machado
- Degree: Master of science
- University: University of Twente
- Year: 2023
- Status: Master thesis
Abstract
The importance of innovation has been a well-established factor in the development of the financial sector. With accessibility to the financial market becoming more and more widespread, through advancement in the field of financial intermediation, almost the whole world has access to the international financial market. What the value of innovations is for the development of economies is a well-studied subject. This paper aims to provide an overview of the changes that the value of innovation has undergone in the last thirty years. By creating this overview the paper bridges a gap in the knowledge of the general shift in the valuation of innovations. A literature review on the value of innovation from the last thirty years was conducted to create this overview.
By creating the overview it was found that there is a consensus in the literature that the value of innovation is measured in the changes that it brings to the stock value of a company. Many inventions were made for the financial market brought more prosperity, there have however also been innovations that caused problems in the system. Negative innovations played a large role in the dot-com crash and the financial crisis. Before these two events there was more freedom for financial innovations to be developed. After these two events the value of innovations was still linked to stock returns, however the effects on culture and society started to play a larger role as well, and as a result, there was a growing call for more regulations. The implication of these developments in the field of innovations are that companies can no longer solely focus on stock returns and that the financial market as a whole should look towards changes in the system to create the proper checks and balances.