Credit Derivatives Essay by Master Researcher

Credit Derivatives
An examination of credit derivatives in modern banking, and how they function in a global market.
# 86755 | 1,575 words | 5 sources | 2005 | US

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This paper discusses credit derivatives in modern banking. The paper gives a brief outline of credit derivatives, and further discusses the concept of how they function within the global market. The paper examines occurrences within banking in relation to credit derivatives and how these events have affected the worldwide opinion regarding the limitations of these transactions. The paper draws conclusions from the research provided, and offers opinions for the future of credit derivatives in banking.

From the Paper:

"When the economy is stable and interest rates are low, banks traditionally struggle for profits because there is not a significant need for loans from consumers or big business. In these moments of financial peace, banks needed methods that would ensure they could survive independently on the downfall of the economy in order to remain solvent. Credit derivatives were born of such concern, allowing bankers, and others, the ability to reduce their risk by selling risk to other parties. Risk was still maintained by lending institutions, but the prospect of intense profit margins was the deciding factor for most banks to begin to participate in credit derivatives. The research will demonstrate that bank use of credit derivatives has been a recorded success, and that credit derivatives continue to grow across the globe as a boom to the banking industry. However, limitations do exist connected with credit derivatives."

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"Credit Derivatives" 01 December 2005. Web. 20 June. 2019. <>