Abstract
This paper addresses the application of financial innovations from the corporate finance perspective. The objective is to identify and prioritize the main types of barriers to the implementation of financial innovations by nonfinancial firms. The motivation behind the study lies in the importance of financial innovations for the firms’ ability to create value. As proven by the extensive literature review, comprehensive studies on financial innovation applications by nonfinancial firms are relatively rare. To cover this cognitive gap, the theoretical argumentation followed by the discussion of results of the empirical research are presented in this paper. The paper provides the results of two-stage survey research, aiming to find opinions of financial managers (end-users) and experts (creators of innovation) on the main barriers to financial innovations in Poland. According to managers, the most important are exogenous barriers, including: (1) Unclear tax and accounting regulations, (2) complex construction of financial innovations, and (3) transaction costs related to their application. On the other side, the experts from financial institutions recognized the greater importance of endogenous factors such as: (1) Lack of sufficient knowledge about financial innovations and (2) the reluctance to change observable in many firms. This study contributes to the ongoing debate on financial innovations by adding the perspective of corporate financial strategy. It also offers insights into the potential actions (at the institutional and individual level) aiming to reduce the barriers and support the implementation of financial innovations by nonfinancial firms.
Highlights
The financial system is highly innovative, with the continuous creation and implementation of new instruments, processes, and financial mechanisms
The respondents were asked to indicate the main motives for using financial innovations
The main nonfinancial motives were indicated as: (1) Searching for competitive advantage; (2) necessity to adjust to changes in the business environment, and (3) necessity to adapt to changes in law regulations
Summary
The financial system is highly innovative, with the continuous creation and implementation of new instruments, processes, and financial mechanisms. Financial innovations are widely discussed in the literature from the macroeconomic perspective concerning their consequences for the global financial system, in the context of the financial crisis (Beck et al 2016; Boz and Mendoza 2014; Den Haan and Sterk 2011; Gai et al 2008; Henderson and Pearson 2009; Redmond 2013) Another stream of studies focuses on selected types of financial innovations, concerning the process of their creation, implementation, and diffusion in the financial system, usually from the perspective of their creators (Frame and White 2014; Klimontowicz 2019; Klimontowicz and Harasim 2019; Marcinkowska 2012; Merton 1995; Silber 1983; Swiecka et al 2020; Vermeulen 2004) or their end-users (Kiezel and Smyczek 2015; Lebelle et al 2020; Lorenz and Pommet 2020; Saksonova and Kuzmina-Merlino 2017). This paper aims to cover this research gap by analyzing the application of financial innovations by nonfinancial firms (other than financial institutions) offering the universal approach
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