Banks have access to different markets for credit risk transfer (CRT), including the credit derivative and the secondary loan markets. We investigate how and why a bank chooses among these markets to hedge the credit risk of a loan. We find that banks with capital and liquidity constraints are...

"The last 35 years have been dramatic for the financial services industry. In the 1990s and 2000s, boundaries between the traditional industry sectors, such as commercial banking and investment banking, broke down, and competition became increasingly global in nature. Many forces contributed to...