Date of Award
Bachelor of Arts
finance, social welfare, investments, economic theory, innovation
Structured products are a rapidly growing type of financial engineering which allow firms to design solutions to meet the individual needs of investors. A structured product is a contract between a financial firm and its client. It involves packaging together traditional and exotic securities, commodities, and options generating a defined payout structure for the client. I ask whether these products enhance social welfare. I argue that, on balance, structured products increase social welfare. I find that while the products are complicated, they are not designed to hide risks nor are they likely to be a source of financial fragility. Rather, structured products mobilize savings, channel savings towards productive investments and distribute risk to those most willing and able to bear them.
Langner, Eric, "Do Structured Products Increase Social Welfare?" (2012). Honors Theses. 843.