Recent research has established the existence of log-periodic power law (LPPL) patterns in financial institutions’ credit default swap (CDS) spreads. The main purpose of this paper is to clarify why credit risk markets are predestined for exhibiting LPPL structures. To this end, the credit...

Recent research has established log-periodic power law (LPPL) patterns prior to the detonation of the German stock index (DAX) bubble in 1998. The purpose of this article is to explore whether a Langevin equation extracted from real world data can generate synthetic time series with comparable...