Security design, which broadly speaking deals with the issue of designing optimal
contractual mechanisms for overcoming various frictions between agents, is the subject of …

We examine the effect of credit default swaps (CDSs) on debt specialization. We argue that
reference firms in CDS contracts, seeking to minimize creditor conflicts and bankruptcy …

This paper studies empirically the relationship between competition and risk taking in
banking markets. We exploit an unique dataset providing information about all bank loans to …

Credit rating-based capital regulation induces financial institutions to take on additional
systematic risk. In this paper, we uncover interconnected channels through which this …

Credit default swaps (CDSs) can create empty creditors who potentially force borrowers into
inefficient bankruptcy but also reduce shareholders' incentives to default strategically. We …

During the US subprime mortgage crisis, credit default swaps (CDS) played a pivotal role
and became an influential booster. However, most studies only study the systemic risk of …

We find firm cyclicality decreases by 40% after the inception of credit default swap (CDS)
trading. The effect stems from CDS firms' less aggressive asset growth in good times and is …

We analyze the impact of credit default swaps (CDSs) trading on firm investment, long-term
debt financing, and valuation. In our model, the firm is endowed with a real option to initiate …

The anomalous negative relationship between left‐tail risk measures and future returns has
recently attracted the attention of finance researchers. We examine the role of the derivatives …

Lenders reduce their monitoring efforts after hedging their credit risk exposure through credit
default swap (CDS) contracts, which are akin to insurance against borrowers' adverse credit …