Innovation Risk of the Financial Derivatives in China – Taking the accumulator as an example

School of Economics and Management, Beijing Jiaotong University, Beijing, 100044, China

Abstract

The economic development is inseparable from the financial facilitation, and the power of financial development is from the innovation. The financial innovation becomes an important thrust of the survival and development of financial industry. With the wide application of information technology, the financial information has become a common topic in the financial industry. But in the process where the financial industry carries out financial innovation and produces positive effect, it also breaks the original balance, causing a certain degree of negative influence and thus producing financial risks. This article conducts a research by taking the complex derivative KODA (also called accumulator) as an example to interpret KODA’s structure, nature and the financial risks induced thereby. It analyzes the reason for the happening of financial innovation, and meanwhile proposes corresponding advice to prevent the risks, expecting to have a conducive discussion with everyone.