Acknowledgments

If our efforts to illuminate the applications of financial innovation to long-standing social, economic, and environmental problems meet with any success, it is due to the extraordinary assistance of our colleagues. We are indebted to many individuals who made this book possible.

First and foremost, we’d like to thank Lisa Renaud, our editor at the Milken Institute, for her unflagging assistance on this project. Lisa moved us closer to achieving our goals for this volume, and we are deeply grateful for her significant contribution to this book. Without her, it would never have come together.

Much gratitude also goes to Professors Jerry Wind and Steve Kobrin of the Wharton School of the University of Pennsylvania and of Prentice Hall, who encouraged this project and an ongoing collaboration with the Milken Institute. We’d also like to thank Tina Horowitz at the Wharton School for her many efforts. Jim Boyd at Pearson has been very encouraging of this process; we thank him for his patience and the opportunity to launch a new series.

The Milken Institute supported all of the incredibly hard work that went into this volume. Mike Klowden, the Institute’s president and CEO, and Skip Rimer, its director of communications, advanced this project from its inception. We are grateful for the resources they allocated toward the labor-intensive process of editing, researching, and writing. Karen Giles was also encouraging, but took no prisoners in rallying us to create order out of chaos, carving out time for writing and research amid our demanding schedules. She is a generous and patient colleague. Patricia Reiter was the lead research analyst, providing bibliographic and research assistance. Her efforts have been considerable and are much appreciated. Lisa Montessi has been an extraordinary source of knowledge about financial innovations and markets. Her commitment to documenting and creating an ongoing record and legacy of financial innovation at the Milken Institute has made our research possible. Jorge Velasco also provided timely research assistance. Special thanks go to Caitlin Maclean, manager of our Financial Innovations Labs, for all her work on the many Lab reports that served as important sources for this book.

We’d also like to thank other Milken Institute colleagues and researchers who have been involved in our work on global capital markets and financial innovations: Martha Amram, Penny Angkinand, James Barth, Komal Sri-Kumar, Joel Kurtzman, Tong Li, Wenling Lu, Peter Passell, Jill Scherer, and especially Betsy Zeidman. Through their interest, insights, and intelligence, they have been major contributors to this volume.

We have learned much from the leading minds who have advanced this field, including the late Merton Miller, Douglas Gale, Michael Jensen, Stewart Myers, Robert Merton, Robert J. Shiller, Michael Spence, Elena Carletti, Eugene Kandel, Naomi Lamoreaux, Ross Levine, Bradford Cornell, Myron Scholes, Steven Kaplan, Peter Tufano, Josh Lerner, Stuart Gilson, Jun Qian, and Lawrence White.

A number of pioneers in financial innovation have passed away in recent years, but their legacies continue to shape our world and our thinking about the uses of capital. Current and future financial innovators stand on the shoulders of giants like Georges Doriot, who invented venture capital; Louis Kelso, who advocated worker capitalism; Martin Dubilier, who went from crisis management to restructuring troubled companies through leveraged buyouts; George E. Stoddard, who devised real estate transactions known as sale-lease-backs to provide financing to companies that had trouble gaining access to traditional sources of capital; Walter J. Lopp II, who created municipal bond insurance and the concept of tax-exempt financing for pollution-control projects; Walter Wriston, whose innovations extended from negotiable certificates of deposits to ATM networks; Richard A. Musgrave, whose work in public finance enabled us to allocate financial resources for social needs; and many others.

Discussions and debates with many current practitioners have informed this book project. At the Milken Institute, we’ve made a habit of assembling leading financial innovators so that we can learn from their experiences and insights. They include Lewis Ranieri, Richard Sandor, Muhammad Yunus, Alan Patricof, Sir Ronald Cohen, Jacqueline Novogratz, Mary Houghton, Leo Melamed, Wayne Silby, Shari Berenbach, Sucharita Mukherjee, Chris Larsen, and Bert van der Vaart.

Finally, we’d like to thank Michael Milken for his vision as a financial and social innovator in many fields, especially our own. Without his inspiration, interest, and support, the publication of this book would not have been possible. He’s always wisely said that the best investor is a good social scientist—that investors need to understand how to enable people to realize their hopes and dreams, a process that ultimately creates economic growth and prosperity. But, since not all social scientists are good investors, we are grateful for his ongoing support of critical and independent research in this field. His work has inspired us not only to popularize financial innovations and explore the questions that surround them, but also to find practical uses for them.

We are grateful to the organizations that have supported research on financial innovations at the Milken Institute, including the Ford Foundation, the Bill & Melinda Gates Foundation, Google.org, the German Marshall Fund, the Packard Foundation, the F. B. Heron Foundation, the Koret Foundation, the U.S. Department of Commerce, the U.S. Department of Agriculture, the Minority Business Development Agency, and others.

With all this assistance, however, none of this would have been accomplished without the trust, equity, and bonds in our families, to whom we are indebted.

Franklin Allen, The Wharton School
of the University of Pennsylvania

Glenn Yago, Milken Institute