Research on the Influence of Credit Default Swap on the Stability of Financial Market

DOI

10.2991/aebmr.k.220306.011How to use a DOI?

Keywords

Credit default swap; CDS; Hedging; Speculation; Financial crisis; Central clearing

Abstract

The credit default swap market has been in existence since the 1990s. This paper mainly focuses on the investigation of the impact of credit default swap on the stability of the financial market as a whole through literature review and case study. A general overview and the hedging as well as speculation purpose of CDS (Credit Default Swap) are explained in detail. Upon closely analyzing the speculation and counterparty risk of CDS and case study of the fall of Bear Stearns, Lehman Brothers and American International Group (AIG) in 2008, it was concluded that CDS should not to be blamed as the primary reason for the cause of the financial turmoil. Furthermore, considering the introduction of central regulation by Critical Control Points (CCPs) and increased transparency of modern CDS trades, the influence of CDS on financial stability should be reasonably controlled.

Copyright

© 2022 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Yutong Dong
PY  - 2022
DA  - 2022/03/17
TI  - Research on the Influence of Credit Default Swap on the Stability of Financial Market
BT  - Proceedings of the 7th International Conference on Economy, Management, Law and Education (EMLE 2021)
PB  - Atlantis Press
SP  - 72
EP  - 77
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220306.011
DO  - 10.2991/aebmr.k.220306.011
ID  - Dong2022
ER  -