For example, venture capital investments, which were negligible in the early 1980s, rose to more than $ billion in 2000, although they have since dropped back.38 Similarly, initial public offerings for nonfinancial companies (excluding spinoffs and leveraged buyouts) exploded from less than $ billion per year in the late 1980s to roughly $ billion in 2000.39 In terms of managing risk, many large financial institutions have, over the past decade, increasingly adopted internal credit-risk models to improve their ability to assess in real time the riskiness of their portfolios.
In addition, financial-market innovations, including securitizations, credit derivatives, and an improved secondary loan market, have allowed these institutions to better manage their exposure to such risks. These improvements in risk management may help to explain why financial institutions weathered the recent economic downturn so well relative to their difficulties in previous recessions.