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CREDIT DEFAULT SWAPS – WEAPON OF MASS DESTRUCTION OR RELIABLE INDICATOR?
Author(s) -
Klieber Dennis Sebastian
Publication year - 2012
Publication title -
economic affairs
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.24
H-Index - 18
eISSN - 1468-0270
pISSN - 0265-0665
DOI - 10.1111/j.1468-0270.2011.02133.x
Subject(s) - credit default swap , business , incentive , credit derivative , agency (philosophy) , itraxx , securitization , vulnerability (computing) , default risk , actuarial science , credit risk , finance , economics , credit valuation adjustment , computer security , credit reference , microeconomics , computer science , philosophy , epistemology
Credit Default Swaps (CDS) are said to increase systemic vulnerability, but they also serve as an ex‐ante indicator of default probabilities, more finely‐tuned and more responsive than ratings agency reports. And they provide a useful mechanism for trading risk and an incentive for good management by businesses and governments.