We investigate how the availability of traded credit default swaps (CDSs) affects the referenced firms' voluntary disclosure choices. CDSs enable lenders to hedge their credit risk exposure, weakening their incentives to monitor borrowers. We predict that reduced lender monitoring in turn leads...

We test five hypotheses on whether banks use CDS to hedge corporate loans, provide credit enhancements, obtain regulatory capital relief, and exploit banking relationship and private information. Using new data that link large banks' CDS positions and syndicated lending on individual firms, we...

Risk management has long been recognized as an important component of the portfolio management process. Nonetheless, the effectiveness of portfolio risk management is often hampered by both an incomplete appreciation of the full potential of the risk management function and a limited...

Credit risk is important in developing the performance of a microfinance institution. The aim of this research was to analyze credit risk through a harmonious cultural approach to improve financial performance. Qualitative approach was used to explore the practice of harmonious culture in...

We discuss a general dynamic replication approach to counterparty credit risk modeling. This leads to a fundamental jump-process backward stochastic differential equation (BSDE) for the credit risk adjusted portfolio value. We then reduce the fundamental BSDE to a continuous BSDE. Depending on...

This paper documents the role of capital markets in financing nonfinancial French firms since the adoption of the euro and analyzes its implications for risk using a structural model of credit risk. The analysis suggests that market financing has played a more important role in financing French...

Decentralized finance (DeFi) lending has grown from nonexistent in 2017 to nearly 40 billion US Dollars in deposited funds in May 2022. Using cryptocurrency as collateral, the platforms match speculative margin trading with yield-seeking depositors lending coins pegged to the dollar (stable...

This paper examines the impact of derivatives on bank risk and profitability, with a sample of 25 banks from developed markets during the period 2015 to 2019. The main findings suggest that banks’ use of financial derivatives has decreased bank risk. The major variables include Total Risk,...

Purpose: This study sought to explore the effect of capital management risk on value of the firm among private equity financial firms in Kenya. Design/methodology/approach: Anchored on the agency theory and guided by positivism research philosophy, descriptive research design as well as causal...

Supply Chain Finance is as a portfolio of financing and risk mitigation practices and techniques to optimize the management of the working capital and liquidity invested in supply chain processes and transactions. SCF techniques existing on the market can be divided into three categories:...