The impact of using credit derivatives in hedging credit risks An analytical study of a sample of international banks
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Abstract
The current study aims to measure the extent of the impact of the use of credit derivatives in hedging credit risks in the investigated banks. A set of hypotheses were formulated, the most important of which included the existence of a relationship and impact of the use of credit derivatives in hedging credit risks in the banks studied. The study population represents all major financial institutions and banks subject to the supervision of the Federal Deposit Insurance Corporation in the United States of America (FDIC), which number (2124) financial institutions. The study sample was purposive and consisted of (10) international banks. The study adopted the descriptive analytical approach to extract appropriate results and solutions to the study problem. The data of the researched banks was collected from the Federal Deposit Insurance Corporation website, in addition to the income statement lists, bulletins, and official annual reports issued by them and published on their official websites for the period 2013-2022. The results of the study showed that there is an impact of the credit derivatives variable on the credit risk variable and at the macro and micro levels of the study variables, which had a direct influential role in reducing the credit risks facing the studied banks, with an inverse correlation between them. The study recommended that there be an elaborate strategy for the banks studied in employing credit derivatives for the purposes of hedging credit risks. It also recommends the necessity of transferring the experience of using credit derivatives to hedge credit risks facing banks operating in the local environment. The study also found that trading in these tools is still It takes place outside regulated financial markets.
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