Effects of the financial innovations on the markets

Advancement of information and communication technologies brought a considerable influence economically and socially over the years. Liberalization of capital movements and especially, advancements in communication technologies elevated financial transactions to global scale by means of electronic markets. Financial innovations, essentially being results of economic actors? demand for more profit, can be defined as new financial instruments and financial services composed from financial technologies, institutions and markets. Financial innovation affecting real markets also has an impact on efficiency and economic growth. However, financial innovations bring some uncertainty and risks. Financial innovations change money demand; instability of an economy can easily pass other countries? economies with new financial instruments. This study, following the definition of financial innovations, aims to make an assessment of financial innovations in the light of various economic theories and examine the effects of financial innovations on Turkish economy. In conclusion, usage of new financial instruments and services in Turkey constantly increases.