Building Resilience Through Transitions
Edited by Frances Westley, Katherine McGowan and Ola Tjörnbo
Chapter 9: The global derivatives market as social innovation
The growth of the international market in financial derivatives over the past 40 years has radically changed the governance of the global economy, and this growth can be drawn directly from the development of the Black–Scholes options pricing model. The global derivatives market is an example of a social innovation with a global impact, raising a number of conceptual issues for theories of cross-scale interaction and elective affinity. The derivatives market demonstrated an ideological elective affinity with the deregulatory movement as it grew, was enabled by and provided funding to advances in computing, and was reinforced by the profitability of derivative trading. Governments shifted from being the key players in domestic financial regulation to competing with each other to attract actors in the derivatives industry, a change that raises questions about the nature of cross-scale interactions.
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