Change is inevitable. Whether in life or in business, adaption must take place in order to survive and thrive. Financial innovation is an example of business evolution where firms develop instruments that are more efficient at redistributing risk from those who are unwilling to bear to those who are willing (M. Miller, 1986). There are some experts that believe financial innovation was invented to avoid tax rules and regulations. Although, this is not a as popular an opinion as the prior theory, it is likely there is some truth to both viewpoints. It is widely believed there are six primary causes for financial innovation, they are:
             1. Increased volatility of interest rates, inflation, equity prices, and exchange rates.
             2. Advances in computer and telecommunications technologies.
             3. Greater sophistication and educational training among professional market participants.
             4. Financial intermediary competition.
             5. Incentives to get around existing tax laws.
             6. Changing global patterns of financial wealth.
             Financial innovation can also be classified in three main categories. Market broadening instruments, which increase market liquidity and availability of funds; risk management instruments, which redistribute financial risk to those who are more willing to bear the risk; and arbitraging instruments and processes, which allow the investor to take advantage of certain market perceptions such as information, taxation and regulation (Fabozzi, 2001). No matter the cause or category of the financial innovation the industry will benefit if the innovation stands the test of time and improves upon the efficiency of the financial market.
             One of the most important financial innovations of the 1980's was asset securitization. Best defined as the process that involves the collection or pooling of loans and the sale of securities backed by those loans, asset securitization is an innovation used in many financial industries...