Résultats de recherche pour « Credit crisis »

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.

This article analyzes the role in the credit crisis of the processes by which market participants produce knowledge about financial instruments. Employing documentary sources and 87 predominantly oral history interviews, the article presents a historical sociology of the clusters of evaluation practices surrounding ABSs (asset-backed securities, most importantly mortgage-backed securities) and CDOs (collateralized debt obligations). Despite the close structural similarity between ABSs and CDOs, these practices came to differ substantially and became the province (e.g., in the rating agencies) of organizationally separate groups. In consequence, when ABS CDOs (CDOs in which the underlying assets are ABSs) emerged, they were evaluated in two separate stages. This created a fatally attractive arbitrage opportunity, large-scale exploitation of which sidelined previously important gatekeepers (risk-sensitive investors in the lower tranches of mortgage-backed securities) and eventually magnified and concentrated the banking system’s calamitous mortgage-related losses.

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 been 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 first year of the credit 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 quantify the social gains and costs of derivatives in general and credit default swaps in particular.

What caused the financial crisis that is sweeping across the world? What keeps asset prices and lending depressed? What can be done to remedy matters? While it is too early to arrive at definite answers to these questions, it is certainly time to offer informed conjectures, and these are the focus of this paper.

We use the 2007 credit crisis to assess the effect of financial contracting on real corporate behavior.We identify heterogeneity in financial contracting at the onset of the crisis by exploring ex-ante variation in long-term debt maturity.Our empirical methodology uses an experiment-like design in which we control for observed and unobserved firm heterogeneity via a differences-in-differences matching estimator.We study whether firms with large portions of their long-term debt maturing right at the time of the crisis observe more pronounced outcomes than otherwise similar firms that need not refinance their debt during the crisis.Firms whose long-term debt was largely maturing right after the third quarter of 2007 reduced investment by 2.5% more (on a quarterly basis) than otherwise similar firms whose debt was scheduled to mature well after 2008.This relative decline in investment is statistically significant and economically large, representing approximately one-third of pre-crisis investment levels.A number of falsification and placebo tests confirm our inferences about the effect of credit supply shocks on corporate policies.For example, in the absence of a credit shock ("normal times"), the maturity composition of long-term debt has no effect on investment outcomes.Likewise, maturity composition has no impact on investment when long-term debt is not a major source of funding for the firm.