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Contribution Details
| Type | Conference Presentation |
| Scope | Discipline-based scholarship |
| Title | CDS and Credit: Testng the Small Bang Theory of the Financial Universe with Micro Data |
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| Authors |
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| Presentation Type | paper |
| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published electronically before print/final form (Epub ahead of print) |
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| Event Title | American Economic Association, 2017 Annual Meeting |
| Event Type | conference |
| Event Location | Chicago |
| Event Start Date | January 6 - 2016 |
| Event End Date | January 8 - 2016 |
| Abstract Text | Does hedging motivate CDS trading and does that affect the availability of credit? To answer these questions we couple comprehensive bank-firm level CDS trading data from the Depository Trust and Clearing Corporation with the German credit register containing bilateral bank-firm credit exposures. We find that following the Small Bang in the European CDS market, extant credit relationships with riskier firms increase banks’ CDS trading and hedging of these firms. Holding more CDS contracts of safer firms leads banks to supply relatively more credit to them. Only if banks were properly hedged before the Small Bang they take more risk. |
| Official URL | https://www.aeaweb.org/conference/ |
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