Economics, Econometrics and Finance
4 years ago

Credit Default Swaps Increase Credit Risk and Bankruptcies for Firms.

India studies in business and economics
Does the Tail Wag the Dog? The Effect of Credit Default Swaps on Credit Risk
Marti G. Subrahmanyam, Dragon Yongjun Tang, Sarah Qian Wang

Paper Summary

Related papers

Economics, Econometrics and Finance
8 years ago

Credit Derivatives Revolutionize Risk Management in Financial Markets

Credit Risk
Insurance Dynamics
Ageing Research
2 views
Economics, Econometrics and Finance
2 years ago

Collateralized Derivatives Not Risk-Free: Credit Dependency Impacts Pricing.

Credit Risk
Banking Finance
2 views
Economics, Econometrics and Finance
2 years ago

Credit Default Swaps Revolutionize Risk Management in Financial Markets

Credit Risk
2 views

Credit default swaps (CDS) trading can increase the credit risk of companies, leading to more rating downgrades and bankruptcies. Distressed firms connected to CDS trading are more likely to go bankrupt. Companies with more CDS contracts without restructuring clauses are hit harder by CDS trading. The number of creditors also goes up after CDS trading starts, making it harder to resolve financial problems.