asymmetric and imperfect collateralization with the associated counter party credit risk. By introducing the collateral coverage … (CVA), and the collateral cost adjustment (CCA) independent from the credit risk. We have studied each term closely, and …

reluctance to clear derivative trades in the absence of a central clearing obligation. We develop a comprehensive understanding … moving from a bilateral to a clearing architecture for derivative markets. Previous studies suggest that central clearing is … beneficial for single market participants in the presence of a sufficiently large number of clearing members. We show that three …

reluctance to clear derivative trades in the absence of a central clearing obligation. We develop a comprehensive understanding … moving from a bilateral to a clearing architecture for derivative markets. Previous studies suggest that central clearing is … beneficial for single market participants in the presence of a sufficiently large number of clearing members. We show that three …

This paper studies the optimal clearing arrangement for bilateral financial contracts in which an assessment of …, at a cost, about the commitment of their borrowers, which affects the assessment of counterparty risk. Clearing through a … and reveal information. If information acquisition is incentive‐compatible, then lenders choose central clearing. If it is …

Bilateral financial contracts typically require an assessment of counterparty risk. Central clearing of these financial … and to reveal information about such risk. When considering this trade-off, participants would choose central clearing if … information acquisition is incentive compatible. If it is not, they may prefer bilateral clearing, when this choice prevents …

clearing practices to affect the size of positions, recovery rate and premium. This model not only has the benefit of being … realist to the light of causes and propagation of great recession but also to assessing clearing practices in a partial … premium is high when mutualization takes place as clearing policy; the new allocation is characterized by a high recovery rate …