Why and How Do Banks Lay Off Credit Risk?: The Choice between Loan Sales Versus Credit Default Swaps
نویسندگان
چکیده
منابع مشابه
Laying off Credit Risk: Loan Sales versus Credit Default Swaps∗
After making a loan, a bank finds out if the loan needs contract enforcement (“monitoring”); it also decides whether to lay off credit risk in order to release costly capital. A bank can lay off credit risk by either selling the loan or by buying insurance through a credit default swap (CDS). With a CDS, the originating bank retains the loan’s control rights but no longer has an incentive to mo...
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ژورنال
عنوان ژورنال: SSRN Electronic Journal
سال: 2012
ISSN: 1556-5068
DOI: 10.2139/ssrn.2049889