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Franklin Allen	Glenn Yago

Financial innovations can transform ideas into new technologies, industries and jobs. They can expedite medical cures, spark economic growth in the developing world, clean up the environment and help food assistance groups spend their money more efficiently. But if complex financial structures are used recklessly - as they were before the recent crisis - the consequences can be severe.

In their new book, "Financing the Future: Market-Based Innovations for Growth," authors Franklin Allen and Glenn Yago trace the evolution of financial innovations and how they have advanced a variety of fields. The authors argue that the financial crisis offers a cautionary tale, but shouldn't be used as an opportunity to quash innovation altogether. They identify crucial differences between genuinely useful innovations and instruments designed merely to hide risk and generate quick profits.

Allen and Yago discussed not only their book but also their views on financial reform, innovations in banking by mobile phone, and financing the development of oil substitutes, among other topics, at this Milken Institute Forum.

Allen is a professor of finance and economics at the Wharton School of the University of Pennsylvania, where he has been on the faculty since 1980. The co-director of the Wharton Financial Institutions Center, Allen is also executive editor of the Review of Financial Studies.

Yago is the executive director of financial research at the Milken Institute. He is the co-author of several books, including "The Rise and Fall of the U.S. Mortgage and Credit Markets."

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