Gennaioli, Nicola; Shleifer, Andrei; Vishny, Robert W. - 2010 - Second draft: May 2010
We present a standard model of financial innovation, in which intermediaries engineer securities with cash flows that … fragile, even without leverage, precisely because the volume of new claims is excessive. Financial innovation can make both … avenues for financial reform. -- Financial Innovation ; Financial Fragility ; Securities ; Risks …