An Empirical Study On The Impact Of Credit Derivatives On Commercial Bank's Operating Performance

Credit derivatives,a rising in 1990's,are innovative financial instruments designed for managing or shifting credit risks.Those products make it more effective for commercial banks to manage credit risks and hence the change of traditional characteristics of commercial banks' credit risk management.The concentration of credit risk and huge non-performing assets are a big problem which our commercial banks are facing,and the management of the credit risk in our commercial banks is very low.The application of credit derivatives is vacant in our country.As a result,the commercial banks in our country must improve the technology of credit risk management as soon as possible.This thesis aims to bring this new technology and the new products to our country,and hope to improve the management of the credit risk in our commercial banks.On the basis of describing the categories of credit derivatives,the paper analyzes the impact of credit derivatives on commercial bank's operating performance in theory.Then taking JP Morgan Chase and Bank of America as an example,the paper makes an empirical study on the impact of credit derivatives on commercial bank's operating performance.The conclusion is:Credit derivatives have positive and negative effects on commercial bank's operating performance.Although the credit derivatives market is not mature,and still has some risk and negative effects,credit derivatives have a huge potential in the domain of credit risk management.Along with the credit derivatives market becoming mature,the risk will be controlled,and credit derivatives' effects on commercial bank's operating performance will tend to be positive.At last,the paper analyzs the necessity and feasibility of introducing credit derivatives market to China.