SUMMARY
The United States financial crisis, starting with the credit boom of 2007 and ending with the failure of Lehman Brothers in September 2008, has led to a loss of confidence in the United States financial system. The Financial Crisis Inquiry Commission indicated that the financial crisis affected over 26 million Americans. Many scholars have attributed the crisis to financial innovations, such as mortgage backed securities, adjustable rate mortgages and no-income verified loans, as key innovations that led to the market collapse. Financial innovations have had both positive and negative impacts on the financial industry. Providing a framework that describes the relationship between economic cycle swings and adoption rates of innovative financial instruments can provide greater stability and predictability in financial innovation diffusion, which can lead to more stable returns for shareholders and enhance the public interest through a healthy, innovative and more stable financial industry. An abbreviated evidence-based systematic review was completed on financial innovations that led to the financial crisis of 2007. The research suggests that there is an equilibrium period of time that financial organizations can adopt innovation to avoid unintended consequences like the recent financial crisis. Providing a framework of adoption time can demonstrate where financial innovations can be absorbed to provide the organization with the ability to financially innovate during pro and counter cyclical economic periods. Through an understanding of the timing of financial innovations as they occur in economic cycles, managers of financial organizations can choose the adoption period of time more carefully which could have averted the financial crisis that affected millions of Americans.