Financial Engineering: Concepts, Applications and Drivers of Growth
Authors: Babarinde GF
The objective of this paper was to review the concept, tools, scope, nature, applications, and the drivers of growth of financial engineering. From the desk research, it was found that financial engineering is not one of the fields of engineering but a major discipline within finance. Financial engineering as an idea has existed from the time man started transacting financial business but its evolution as a terminology and a distinct profession is of recent origin. Therefore, financial engineering could be described as a multidisciplinary study that applies the tools of mathematics, methods of engineering, economic principles, and financial theories as solutions to problems in finance and as an aid to financial decisions of economic agents. Financial engineering plays significant roles in any economy and its potential impact in a developing economy like Nigeria is acknowledged in theoretical literature. However, most emerging capital markets lack financially-engineered products such as derivatives. It is imperative for the Nigerian government to introduce formal derivatives market after creating enabling legal frameworks and institutional arrangements needed for its smooth take off. Extensive research on financial engineering is also required for the development of derivatives market in emerging economy like Nigeria.
Affiliations: Department of Banking and Finance, School of Management and Information Technology, Modibbo Adama University of Technology, PMB 2076, Yola, Nigeria
Keywords: Desk Research, Derivatives, Financial Engineering, Derivatives Markets, Nigeria
Published date: 2020/06/30