Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/162564
Authors: 
Gündüz, Yalin
Ongena, Steven
Tümer-Alkan, Günseli
Yu, Yuejuan
Year of Publication: 
2017
Series/Report no.: 
Bundesbank Discussion Paper 16/2017
Abstract: 
Does hedging motivate CDS trading and does that affect the availability of credit? To answer these questions we couple comprehensive bank-firm level CDS trading data from the Depository Trust and Clearing Corporation with the German credit register containing bilateral bank-firm credit exposures. We find that following the Small Bang in the European CDS market, extant credit relationships with riskier firms increase banks' CDS trading and hedging of these firms. Properly hedged banks holding more CDS contracts of riskier firms supply relatively more credit to these firms. Our results are overall stronger for firm CDSs experiencing larger improvements in liquidity.
Subjects: 
credit default swaps
credit exposure
hedging
bank lending
Depository Trust and Clearing Corporation (DTCC)
JEL: 
G21
ISBN: 
978-3-95729-369-5
Document Type: 
Working Paper
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