The scope of financial innovation through financial engineering

Financial innovation has been a continuous and integral part of corporate world. Greater freedom and flexibility have thus enabled companies to invent and innovate financial instrument and their subsequent introduction. A variety of factors such as increased interest rate, volatility, frequency of tax and regulatory changes etc have stimulated the process of financial innovations. The deregulation of financial service industry and increased competition with in investment banking undoubtedly led to increased emphasis on the ability to design new products, develop better process, and implement more effective solution for increasingly complex financial problems. These financial innovations are a result of number of Government regulations, tax policies, globalization, liberalization, privatization, integration with the international financial market and increasing risk in the domestic financial market. With the increased volatility in the capital market, the need for new financial innovations to hedge risk and increase returns cannot be overstated.

In this paper, I mentioned the relevance of financial innovations with Indian capital market and their compatibility with participants here-to. Furthermore I described the financial engineer modus operandi to source the value gain and restructuring possible.