Finding Systemically Important Financial Institutions Around the Global Credit Crisis: Evidence from Credit Default Swaps

2010 ◽  
Author(s):  
Jian Yang ◽  
Yinggang Zhou
Keyword(s):  
Financial Institutions ◽  
Credit Default Swaps ◽  
Credit Crisis ◽  
Credit Default

The Rise of Credit Default Swaps and Its Implications on Financial Stability

2018 ◽  
pp. 336-350
Author(s):  
Fatma Sezer Dural
Keyword(s):  
Credit Risk ◽  
Exponential Growth ◽  
Financial Stability ◽  
Credit Default Swap ◽  
Credit Default Swaps ◽  
Financial Instruments ◽  
Credit Crisis ◽  
Credit Default ◽  
Default Swap ◽  
The Stability

The credit default swap market has experienced an exponential growth in recent decades. Though the fırst credit default swap contract was negotiated in the mid-1990s, the market has enjoyed a surge of popularity beginning in 2003. By the end of June 2013, the outstanding amount reached 24.3 trillion dollars. It is mostly used to transfer or to hedge credit risk. Concurrently with the global credit crisis, several shortcomings in CDS markets have appeared. One of the obvious questions is whether they affect the stability of financial markets. In this context after broader exhibition of credit default swaps market, speculative use of CDS, inception of central counterparty, and transparency of CDS market is handled. As a conclusion, it is true that the CDS market still has some weaknesses, but it is no more prone to be destabilizing than other financial instruments. This is shown in this chapter.

scholarly journals Credit Default Swaps and the Credit Crisis

2010 ◽  
Vol 24 (1) ◽  
pp. 73-92 ◽  
Author(s):  
René M Stulz
Keyword(s):  
Social Welfare ◽  
Credit Default Swaps ◽  
Counterparty Risk ◽  
Credit Crisis ◽  
Over The Counter ◽  
Bilateral Contracts ◽  
Financial Strength ◽  
The Social ◽  
Credit Default

Many observers have argued that credit default swaps contributed significantly to the credit crisis. Of particular concern to these observers are that credit default swaps trade in the largely unregulated over-the-counter market as bilateral contracts involving counterparty risk and that they facilitate speculation involving negative views of a firm's financial strength. Some observers have suggested that credit default swaps would not have made the crisis worse had they traded on exchanges. I conclude that credit default swaps did not cause the dramatic events of the credit crisis, that the over-the-counter credit default swaps market worked well during much of the crisis, and that exchange trading has both advantages and costs compared to over-the-counter trading. Though I argue that eliminating over-the-counter trading of credit default swaps could reduce social welfare, I also recognize that much research is needed to understand better and to quantify the social gains and costs of derivatives in general and credit default swaps in particular.

scholarly journals Credit Default Swaps: The Good, The Bad And The Ugly

2010 ◽  
Vol 8 (4) ◽  
Author(s):  
Terry Young ◽  
Linnea McCord ◽  
Peggy J. Crawford
Keyword(s):  
Financial Institutions ◽  
Credit Default Swaps ◽  
Economic Downturn ◽  
Font Size ◽  
Credit Default

<p style="text-align: justify; margin: 0in 0.5in 0pt; background: white; mso-pagination: none;"><span style="font-size: 10pt;"><span style="font-family: Times New Roman;">Credit Default Swaps have been a major cause of problems to financial institutions during the current economic downturn.<span style="mso-spacerun: yes;">&nbsp; </span>What is a CDS?<span style="mso-spacerun: yes;">&nbsp; </span>Why was it developed?<span style="mso-spacerun: yes;">&nbsp; </span>What went wrong?<span style="mso-spacerun: yes;">&nbsp; </span>This paper discusses these questions.</span></span></p>

The Rise of Credit Default Swaps and Its Implications on Financial Stability

2015 ◽  
pp. 341-354
Author(s):  
Fatma Sezer Dural
Keyword(s):  
Credit Risk ◽  
Exponential Growth ◽  
Financial Stability ◽  
Credit Default Swap ◽  
Credit Default Swaps ◽  
Financial Instruments ◽  
Credit Crisis ◽  
Credit Default ◽  
Default Swap ◽  
The Stability

The credit default swap market has experienced an exponential growth in recent decades. Though the first credit default swap contract was negotiated in the mid-1990s, the market has enjoyed a surge of popularity beginning in 2003. By the end of June 2013, the outstanding amount reached 24.3 trillion dollars. It is mostly used to transfer or to hedge credit risk. Concurrently with the global credit crisis, several shortcomings in CDS markets have appeared. One of the obvious questions is whether they affect the stability of financial markets. In this context after broader exhibition of credit default swaps market, speculative use of CDS, inception of central counterparty, and transparency of CDS market is handled. As a conclusion, it is true that the CDS market still has some weaknesses, but it is no more prone to be destabilizing than other financial instruments. This is shown in this chapter.

The Debts that Bind Us: A Comparison of Amazonian Debt-Peonage and U.S. Mortgage Practices

2011 ◽  
Vol 53 (2) ◽  
pp. 344-370 ◽  
Author(s):  
Evan Killick
Keyword(s):  
United States ◽  
Financial Institutions ◽  
Global Financial Crisis ◽  
House Prices ◽  
Housing Prices ◽  
The United States ◽  
Credit Default Swaps ◽  
Mortgage Lending ◽  
Credit Default ◽  
Downward Spiral

Three years after the global financial crisis started academic and popular publications assessing its origins, consequences and wider implications are starting to emerge. The origins of the crisis are generally explained as stemming from the rapid increase in subprime mortgage lending in the United States and the credit default swaps banks and other financial institutions traded amongst themselves based on these loans. As homeowners found it increasingly difficult to make their repayments and housing prices in the United States started to drop, a downward spiral ensued. In this cycle ever-growing numbers of homeowners defaulted on their mortgages, unable to meet interest payments or to re-mortgage, and banks foreclosed on the houses even as their own assets and investments were exposed to the losses stemming from defaulted mortgages. With the foreclosures devaluing house prices further and the exposure of banks making them less willing and able to refinance mortgages, the situation quickly spiraled downwards. The complex global trade in credit default swaps and other derivatives meant that the problems were amplified and spread beyond the United States until ultimately many national governments decided to intervene with financial assistance mainly aimed at the financial institutions.

Credit Default Swaps and the Credit Crisis

CFA Digest ◽  
2010 ◽  
Vol 40 (2) ◽  
pp. 13-15
Author(s):  
Lee M. Dunham
Keyword(s):  
Credit Default Swaps ◽  
Credit Crisis ◽  
Credit Default
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