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Article: Roles of financial innovation and information technology: lessons from US sub-prime mortgage crisis and its implications for China

TitleRoles of financial innovation and information technology: lessons from US sub-prime mortgage crisis and its implications for China
Authors
KeywordsEconomic development
Financial crisis
Financial policy
Financial services
Globalization
Issue Date2012
PublisherSpringer Verlag. The Journal's web site is located at http://www.springer.com/earth+sciences+and+geography/geography/journal/11769
Citation
Chinese Geographical Science, 2012, v. 22 n. 3, p. 343-355 How to Cite?
AbstractThe mortgage loan has evolved from a local lending instrument into a major global security and its role is unparallel to other financial instruments in the process of financial globalization. This paper explains how technology and financial innovation transformed the mortgage loan from a local security into a premier global security traded worldwide. It examines the fundamental flaws of this process and why it does not work in regards to mortgage lending and the re-securitization products that were created through financial innovation. The findings show that regulation was unable to keep pace with financial innovation, which created an environment where actors in the financial service sector were able to behave geographically irresponsibly by using information asymmetries to their advantage by participating in moral hazard activities and engaging in other immoral and unethical business practices that were centered around localized geography, which ultimately contributed to the global financial crisis. It also examines the roll of financial innovation in regard to the Lehman Brothers Mini-Bond in Hong and its role as a driving force behind China's newly emerging shadow banking sector. It concludes with a policy recommendation and its implication for China's continued economic development. © Science Press, Northeast Institute of Geography and Agroecology, CAS and Springer-Verlag Berlin Heidelberg 2012.
Persistent Identifierhttp://hdl.handle.net/10722/152932
ISSN
2015 Impact Factor: 1.145
2015 SCImago Journal Rankings: 0.454
ISI Accession Number ID
Funding AgencyGrant Number
International Centre for China Development Studies, the University of Hong Kong
Funding Information:

Under the auspices of International Centre for China Development Studies, the University of Hong Kong

 

DC FieldValueLanguage
dc.contributor.authorLenzer, JHen_US
dc.contributor.authorZhao, SXen_US
dc.date.accessioned2012-07-16T09:52:21Z-
dc.date.available2012-07-16T09:52:21Z-
dc.date.issued2012en_US
dc.identifier.citationChinese Geographical Science, 2012, v. 22 n. 3, p. 343-355en_US
dc.identifier.issn1002-0063-
dc.identifier.urihttp://hdl.handle.net/10722/152932-
dc.description.abstractThe mortgage loan has evolved from a local lending instrument into a major global security and its role is unparallel to other financial instruments in the process of financial globalization. This paper explains how technology and financial innovation transformed the mortgage loan from a local security into a premier global security traded worldwide. It examines the fundamental flaws of this process and why it does not work in regards to mortgage lending and the re-securitization products that were created through financial innovation. The findings show that regulation was unable to keep pace with financial innovation, which created an environment where actors in the financial service sector were able to behave geographically irresponsibly by using information asymmetries to their advantage by participating in moral hazard activities and engaging in other immoral and unethical business practices that were centered around localized geography, which ultimately contributed to the global financial crisis. It also examines the roll of financial innovation in regard to the Lehman Brothers Mini-Bond in Hong and its role as a driving force behind China's newly emerging shadow banking sector. It concludes with a policy recommendation and its implication for China's continued economic development. © Science Press, Northeast Institute of Geography and Agroecology, CAS and Springer-Verlag Berlin Heidelberg 2012.-
dc.languageengen_US
dc.publisherSpringer Verlag. The Journal's web site is located at http://www.springer.com/earth+sciences+and+geography/geography/journal/11769-
dc.relation.ispartofChinese Geographical Scienceen_US
dc.rightsThe original publication is available at www.springerlink.com-
dc.subjectEconomic development-
dc.subjectFinancial crisis-
dc.subjectFinancial policy-
dc.subjectFinancial services-
dc.subjectGlobalization-
dc.titleRoles of financial innovation and information technology: lessons from US sub-prime mortgage crisis and its implications for Chinaen_US
dc.typeArticleen_US
dc.identifier.emailLenzer, JH: jim.lenzer@gmail.comen_US
dc.identifier.emailZhao, SX: sxzhao@hku.hk-
dc.identifier.authorityZhao, SX=rp00597en_US
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1007/s11769-012-0539-8-
dc.identifier.scopuseid_2-s2.0-84863687489-
dc.identifier.hkuros201987en_US
dc.identifier.volume22en_US
dc.identifier.issue3-
dc.identifier.spage343en_US
dc.identifier.epage355en_US
dc.identifier.isiWOS:000304136200008-
dc.publisher.placeChina-
dc.identifier.citeulike10689796-

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