Financial Engineering and Innovation as Risk Management Tools: The Case of Indian Companies During Global Financial Crisis

IUP Journal of Risk & Insurance, Vol. 7, Nos. 1 & 2, pp. 50-66, January & April 2010

Posted: 23 Apr 2010

See all articles by Vivek Rameshbhai Shah

Vivek Rameshbhai Shah

affiliation not provided to SSRN

Padma Srinivasan

Manipal University, Bangalore Campus

Abstract

In layman’s terms, financial engineering is an engineering discipline which deals with the creation of new and improved financial products through innovative design or repackaging of existing financial instruments. Financially, engineered products like American Depository Receipt (ADR) and Global Depository Receipt (GDR) have provided Indian companies access to international financial markets to raise funds. However, financial engineering is considered as being responsible for triggering the global financial crisis by increasing leverage and price risks. The regulatory framework is not the only solution to deal with the negative side of financial engineering, the informed market that responds sensibly to financial innovations (which is the current need) is also responsible. This paper looks into how fund raising by innovative financial instruments impacts the share price of the company using the cases of the Indian corporate houses.

Suggested Citation

Shah, Vivek Rameshbhai and Srinivasan, Padma, Financial Engineering and Innovation as Risk Management Tools: The Case of Indian Companies During Global Financial Crisis. IUP Journal of Risk & Insurance, Vol. 7, Nos. 1 & 2, pp. 50-66, January & April 2010, Available at SSRN: https://ssrn.com/abstract=1594084

Vivek Rameshbhai Shah

affiliation not provided to SSRN ( email )

Padma Srinivasan (Contact Author)

Manipal University, Bangalore Campus ( email )

Bangalore, Karnataka
India

HOME PAGE: http://www.manipal.edu

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