BizTerm Definition
Financial Engineering
Full Definition

Is a term used to describe the tailoring of standard financial instruments for a particular client or a particular situation. A few definitions: 1. `Financial engineering involves the design, the development, and the implementation of innovative financial instruments and processes, and the formulation of creative solutions to problems in finance.' J Finnerty, "Financial Engineering in Corporate Finance," Financial Management, Winter 1988 issue. 2. The development of new financial products to a make a profit, or b reduce an expense (such as a tax obligation), or c reduce a risk. 3. Risk Management.Financial engineering is almost always a team effort. The engineering is accomplished by combining the skills of several different people - financial analysts, financial engineers, tax experts, lawyers, compliance experts, traders, underwriters, computer programmers and analysts, accountants and financial mathematicians.


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