Case Study On Credit Default Swap Functionality

After the global financial crisis in 2008,the Greek sovereign debt crisis broke out in 2009,and then the crisis spread to all countries in the euro area,gradually evolving into a sovereign debt crisis that swept across Europe.CDS(Credit Default Swap,),as a hedge against debt risk,has been the subject of controversy during the global financial crisis in 2008 and the volume of transactions has dropped drastically.However,the subsequent sovereignty of CDS led to the rapid development of sovereign CDS in Europe.The rapid development of sovereign CDS under the sovereign crisis of European debt provides the best case study of the CDS function.Therefore,this article takes the debt crisis in Europe as an example,through case studies and empirical studies.Discusses the phase function of credit default swap(CDS),first summarizes the previous research,analyzes the dynamic trend and development direction of credit default swap research.Secondly,from the theoretical concept point of view,the concept,function and related features of CDS are analyzed.Then,through the empirical analysis,taking the most serious crisis in Greece as the research object,this paper uses the data of Germany,Italy,Japan and Mexico to understand the function of credit default swap(CDS)and establish coupling effects and Granger causality test and analysis period,we test the functions of arbitrage,speculation and price discovery of CDS.Through the Granger causality test of CDS in different countries,we find that CDS exists Linkage effect function.Finally,the paper summarizes the function of CDS,and gives policy suggestions based on China's market environment and special national conditions.