Chapter

Financing the Future

Glenn Yago and Susanne Trimbath

in Beyond Junk Bonds

Published in print May 2003 | ISBN: 9780195149234
Published online November 2003 | e-ISBN: 9780199871865 | DOI: http://dx.doi.org/10.1093/0195149238.003.0011
Financing the Future

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While this book was being written, the US economy hovered between recession and recovery, and the global economy remained increasingly polarized and endangered by economic stagnation, instability, and inadequate job and capital formation; in this context, extending the logic of financial innovation to new markets and assets is a significant challenge. This final chapter addresses the application of the logic and practice of high‐yield financial innovations to the future, and in doing so, recounts what has been learned in the book and discusses how the means and methods of high‐yield finance might be applied to future challenges. The first three sections of the chapter are as follows: What have we learned? Yield gaps and the role of the high‐yield market; and Toward global market development. The fourth section, Missing markets, identifies several key issues as emerging global risks to sustainable growth and the capacity of the global economy to finance its future, noting that these are the markets that financial innovations and high‐yield markets, and capital markets in general, must address; they are negative capital flows to developing and transition economies, inadequate demand growth, and the absence of middle‐class development in the developing world, and lack of markets to allocate capital adequately and efficiently for entrepreneurial markets and economic growth. The remaining sections of the chapter are as follows: Capital flows; The importance of financial infrastructure; Emerging domestic markets [EDM]; Structured finance for EDM; Environmental finance; and Intellectual capital securitization.

Keywords: ‐yield financing; high‐yield markets; innovation; intellectual capital; middle‐class development; new markets; structured finance; sustainable growth; transition economies; USA; yield gaps

Chapter.  5162 words.  Illustrated.

Subjects: Financial Markets

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