Abstract
Credit derivatives are financial instruments enabling the trading of credit risk separate from other types of risk. This is achieved by appropriately designing, securitizing (section 2 of this chapter) and distributing credit exposure to willing investors. A simple form of a bilateral credit derivatives deal is that two parties agree to exchange predetermined cash flows associated with a given credit event, over a defined maturity.
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Notes
D.N. Chorafas, Stress Testing for Risk Control Under Basel II. Elsevier, Oxford and Boston, 2007.
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© 2009 Dimitris N. Chorafas
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Chorafas, D.N. (2009). The Industrialization of Credit Risk. In: Financial Boom and Gloom. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/9780230235830_5
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DOI: https://doi.org/10.1057/9780230235830_5
Publisher Name: Palgrave Macmillan, London
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