Financial innovation: theoretical issues and empirical evidence in Italy and in the UK

In the first part of the paper, we try to clearly identify financial innovations and draw a general framework. Despite the relevance of financial innovations, a unique definition is difficult to find. We then provide empirical evidence of such innovations on a sample of Italian and UK listed banks over the period 2005–2007 using financial account data. First, the absence of any mention of a specific organizational unit in charge of research and development (R&D) is highlighted. However, the existence of a research and developmental function involving different organizational units cannot be excluded. Second, innovation seems to be mainly concentrated in the product area, both in Italy and in the UK. This could be accounted for by the difference in the “life cycles” of innovations and by the different operational conditions of banks in both systems. Third, larger banks seem more innovative, both in Italy and in the UK. No clear relation between innovation and cost reduction/revenue increase seems to exist, at least in Italy. In the light of the above considerations, policy implication comes to light on whether the choice of not establishing a specific organizational unit dedicated to R&D could turn out effective in the medium-long term.

Grand challenges and entrepreneurship: Emerging issues,research streams,and theoretical landscape

This study discusses how the role of entrepreneurship in addressing the so-called “grand challenges” (e.g., poverty, inequality, pollution, climate change) is evolving and could further evolve, based on the ongoing conversation in the scholarly community. To develop the discussion, we conducted the following steps: (1) a computer-aided semantic analysis; (2) an analysis of the evolution of literature streams; and (3) a network analysis of advocated theories and approaches. All three analyses were based on a selection of 358 publications retrieved via a keyword search and 27 further publications retrieved via an analysis of five recent and relevant special issues published by important scientific journals. Our results show that the call to address grand challenges, particularly after the publication of the United Nations’ Sustainable Development Goals (SDGs), is radically transforming entrepreneurship research, with new issues emerging and replacing traditional issues as core to the discipline, marking a rapid and complex dynamics of research stream divergence and convergence. Similarly, the network of theories and approaches advocated by recent agenda-setting articles depicts an emerging theoretical landscape that is highly innovative. This new theoretical landscape revolves around systems thinking and Ostrom’s theory of the commons as the two key poles, with the embeddedness, stakeholder, institutional, effectuation, processual, and design-oriented approaches being the cross-fertilizing forces linking these two poles. In the final section, we present the nine articles included in the special issue titled “Grand Challenges and Entrepreneurship: Emerging Issues and Research Streams” and briefly synthesize these in the light of the ongoing evolution of the literature.

     

Carry Trade Returns with Support Vector Machines

This paper proposes a novel approach to directional forecasts for carry trade strategies based on support vector machines (SVMs), a learning algorithm that delivers extremely promising results. Building on recent findings in the literature on carry trade, we condition the SVM on indicators of uncertainty and risk. We show that this provides a dramatic performance improvement in strategy, particularly during periods of financial distress such as the recent financial crises. Disentangling the measures of risk, we show that conditioning the SVM on measures of liquidity risk rather than on market volatility yields the best performance.