This valuable book discusses in detail, through a blend of theory and empirical research, the processes of innovation and the diffusion of new financial instruments. The contributors explore theoretical issues such as the relationship between financial innovation and market structure and the legal protection of financial innovation. They examine various topics on retail banking, from payment services and procedures, trading online, internet banking and profitability of retail banking to microfinance. This comprehensive book also focuses on innovation in corporate banking, such as credit derivatives and their implications for the relationship between banks and markets in financial systems.This book will be invaluable to postgraduate students, researchers and academics with an interest in economics and finance and financial innovation in particular.