Can we have a general theory of financial innovation processes? : a conceptual review

Introduction: Since the financial crisis of 2008, the theory of financial innovation has been a focus at a time of re-evaluation and re-conceptualization. However, little has been done to evaluate the current state of research considering the increasing complexity of financial innovation. This paper examines the hypothesis of a general theory that encompasses increasing complexities in the financial innovation process. Methods: The paper begins with an overview of the definitions, the features, and the classification schemes of financial innovation. Additionally, the paper reviews the existing literature on the main objects of study in financial innovation and groups the findings under four main concepts. A conceptual analysis is presented that evaluates current approaches to the study of the financial innovation process and the difficulties inherent in constructing a single general theory. The paper proposes a framework based on a meta-theory of financial innovation as a better approach to understanding the inherent complexities and diversities affecting financial innovations. Discussion: (1) Financial innovations present diversities and complexities that make it infeasible to build a unifying general theory to explain their development. (2) The current state of research on financial innovation theories is limited and requires additional input. (3) A meta-theory that identifies, classifies, and connects theories of development for financial innovations is better suited to explaining the complexity of financial innovation processes.