The study resulted in the identification and elaboration of numerous facts and information about financial innovation and innovative financial instruments that should be of significant utility to the readers of this research study. The study furthermore revealed that whilst the use of innovative financial instruments has been considered to be one of the main drivers of the banking and financial crisis of 2007-2009, it is more or less established that whilst the gross misuse of financial instruments contributed to the development of systemic risk, this was a one off episode and financial instruments, especially mortgage backed securities help in the transfer and sharing of risk rather than in its aggravation. Innovative financial instruments are however associated with several risks, including market risk, interest rate risk, currency risk, counterparty risk and settlement risk. It is thus important to identify such risks in order to manage and mitigate them.
Millions of people are making use of these instruments for savings, investments, speculation and the management and mitigation of diverse types of financial risks. There is little doubt that innovation in the area of financial instruments will continue in the coming years, driven by the needs and requirements of individuals and institutions for availing of their numerous benefits, especially in areas of speculation, hedging, sharing and transfer of risks.
5.2. Limitations
The outcomes of this research study may be limited to some extent on account of its dependence upon secondary research and the absence of any primary information.
5.3. Recommendations
It is thus suggested that primary information on various aspects of innovative financial instruments should be obtained from selected experts in areas of finance and banking through the holding of semi-structured interviews. The obtaining of such primary information and its comprehensive analysis should add to the outcomes of this research study.
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