SOURCE: Milken Institute

Milken Institute

April 20, 2010 17:25 ET

"Financing the Future: Market-Based Innovations for Growth" Examines Role of Financial Innovations in Recovery and Future Prosperity

NEW YORK, NY--(Marketwire - April 20, 2010) -  Wharton School Publishing and the Milken Institute announce the release of Financing the Future: Market-Based Innovations for Growth, the first post-crisis book that steps into the debate on financial innovation with clear-headed analysis, laying out rules for its responsible use and advocating its potential to help create global prosperity. 

Financing the Future: Market-Based Innovations for Growth seeks to move beyond the finger-pointing and reclaim the concept of financial innovation from current misunderstandings. Real innovation, the book argues, is focused on increasing transparency and managing risk, unlike the opaque and needlessly complex financial products that wreaked havoc during the crisis.

In Financing the Future, co-author Franklin Allen, Nippon Life Professor of Finance and Professor of Economics at The Wharton School of the University of Pennsylvania, says, "Since the seismic jolts that shook world markets in 2008, a full-throated debate has raged about whether financial innovation got us into this mess in the first place."

"It's critical that we don't confuse real financial innovation with intentionally opaque financial products whose sole purpose was speculation or deception," said co-author Glenn Yago, Executive Director of Financial Research at the Milken Institute. "Real financial innovation was not the cause of the crisis, but it is surely needed to accelerate the recovery and fund our future needs."

The book lays out the historical significance of innovation and its role in creating solutions for business, housing markets, environmental finance, the developing world and medical research. The authors note that if the right tools are deployed responsibly, financial innovation has the capacity to help us shape a more sustainable and prosperous future.

Allen and Yago explain how sophisticated capital structures that align the interests of entrepreneurs, investors, non-profits, and governments can enable companies and individuals to raise funding in larger amounts for longer terms and at lower cost -- accomplishing tasks that would otherwise be impossible.

They recount the history and basic principles of financial innovation, showing how new instruments have evolved and how they have been used and misused. The authors demystify complex capital structures, offering a practical toolbox for entrepreneurs, corporate executives and policymakers.

Financing the Future crystallizes the lessons of the recent crisis, offering essential insights for stabilizing the economy and avoiding pitfalls. Readers will learn about:

  • Distinguishing genuine innovation from dangerous copycats
  • Crafting sustainable financial innovations that add value and manage risk
  • Selecting the right instruments and structures
  • Specific innovations for business, housing and medical research
  • The power of finance to protect natural resources and alleviate global poverty

Details on Financing the Future: Market-Based Innovations for Growth (Wharton School Publishing, Hardcover, ISBN-13: 9780137011278, 256 pages, $29.99, April 2010), including a free excerpt, are available online at http://www.whartonsp.com/store/product.aspx?isbn=013701127X

This is the first in a new series of books on Financial Innovation, published through a collaboration between Wharton School Publishing and the Milken Institute. Future titles will focus on specific policy areas such as housing and medical research.

Please contact Pedro Rodriguez, 212-539-3232, pedror@mbooth.com, to request an interview with Franklin Allen, copy of the book or book excerpt. Contact Jennifer Manfré, 310-570-4623, jmanfre@milkeninstitute.org, for an interview with Glenn Yago or more information on the Milken Institute's work on financial innovation.

About the Authors
Franklin Allen
is the Nippon Life Professor of Finance and Professor of Economics at the Wharton School of the University of Pennsylvania, where he has been on the faculty since 1980. A current co-director of the Wharton Financial Institutions Center, he was formerly vice dean and director of Wharton Doctoral programs, as well as executive editor of the Review of Financial Studies, one of the nation's leading academic finance journals. Allen is a past president of the American Finance Association, the Western Finance Association, the Society for Financial Studies, and the Financial Intermediation Research Society. His main areas of interest are corporate finance, asset pricing, financial innovation, comparative financial systems, and financial crises. He is a co-author, with Richard Brealey and Stewart Myers, of the eighth through tenth editions of the textbook Principles of Corporate Finance. Allen received his doctorate from Oxford University.

Glenn Yago is Executive Director of Financial Research at the Milken Institute. He is also a visiting professor at Hebrew University of Jerusalem and directs the Koret-Milken Institute Fellows program. Yago's work focuses on the innovative use of financial instruments to solve longstanding economic development, social, and environmental challenges. His research and projects have contributed to policy innovations fostering the democratization of capital to traditionally underserved markets and entrepreneurs in the United States and around the world. Yago is the co-author of several books, including The Rise and Fall of the U.S. Mortgage and Credit Markets, Global Edge, Restructuring Regulation and Financial Institutions, and Beyond Junk Bonds. He was a professor at the State University of New York at Stony Brook and at the City University of New York Graduate Center. Yago earned his Ph.D. at the University of Wisconsin, Madison.

About The Milken Institute
The Milken Institute (www.milkeninstitute.org) is a nonprofit, independent economic think tank whose mission is to improve the lives and economic conditions of diverse populations around the world by helping business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity. It is based in Santa Monica, CA.

About Wharton School Publishing
Wharton School Publishing (www.whartonsp.com) is dedicated to presenting the world's foremost business thinkers in print, audio, and interactive formats. All titles must be approved by a senior Wharton faculty review board to ensure that they are timely, important, conceptually sound, empirically based, and implementable. The editorial focus on applicable knowledge, along with multi-media publishing, enables readers to gain new insights into the issues shaping the future of business, and plan and take action to achieve their goals. Wharton School Publishing is a partnership between Pearson, the world's leading education company, and the Wharton School of the University of Pennsylvania.

About Pearson
The global leader in educational and professional publishing, Pearson is home to such respected brands as FT Press (www.ftpress.com), Wharton School Publishing, Addison-Wesley Professional, Cisco Press, Exam Cram, IBM Press, Prentice Hall Professional, Que, and Sams Publishing, which have as their online publishing arm, InformIT (www.informit.com) -The Trusted Technology Learning Source. Pearson is also co-founder, with O'Reilly Media Inc., of Safari Books Online (http://safari.informit.com), the premier on-demand technology content library providing thousands of expert reference materials through a single point of contact, including expert technology, creative and design, industry and management resources in video, audio and written formats. Pearson Education is part of Pearson (NYSE: PSO), the international media company. Pearson's other primary businesses include the Financial Times Group and the Penguin Group.

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