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OXFORD REVIEW OF ECONOMIC POLICY, VOL. 2, NO. 4, PP. 1
© 1986 Oxford University Press and Oxford Review of Economic Policy Ltd

research-article

THE ASSESSMENT

FINANCIAL INNOVATION: CURSE OR BLESSING?

COLIN MAYER1
St Anne's College Oxford

Abstract

Between 1980 and 1985 the British growth rate averaged 7.7% per annum. Employment increased by 18% and real wages increased by 31%. This impressive record was unfortunately not observed throughout the economy but restricted instead to one sector: inancial services. This sector and its relationship to the rest of the economy is the subject of this issue.

As financial services go through one of their most radical restructurings of this century, this Assessment-analyses the factors underlying these changes. A picture of the function of different financial institutions emerges which allows the concerns that have been expressed about recent developments in financial markets to be re-evaluated. The worrying implication is that systems for correcting substantial financial disruption are not yet in place.

Footnotes

1 This paper is in part based on a Centre for Economic Policy Research project "An International Study of Corporate Financing", for which support from the Japan Foundation is gratefully acknowledged. I have benefited from discussions with bankers and government officials in London, New York, Paris, Tokyo and Washington. I am grateful to Christopher Allsopp, Margaret Bray, Christopher Gilbert and Harold Rose for helpful comments on an earlier draft. All errors are the responsibility of the author.


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