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Risk management by structured derivative product companies

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Abstract

In the early 1990s, some U.S. securities firms and foreign banks began creating subsidiary vehicles--known as structured derivative product companies (DPCs)--whose special risk management approaches enabled them to obtain triple-A credit ratings with the least amount of capital. At first, market observers expected credit-sensitive customers to turn increasingly to these DPCs. However, the authors find that structured DPCs--despite their superior ratings--have failed to live up to their initial promise and have yet to gain a competitive edge as intermediaries in the derivatives markets.

Suggested Citation

  • William F. Bassett & In Sun Geoum & Eli M. Remolona, 1996. "Risk management by structured derivative product companies," Economic Policy Review, Federal Reserve Bank of New York, vol. 2(Apr), pages 17-37.
    • Handle: RePEc:fip:fednep:y:1996:i:apr:p:17-37:n:v.2no.1
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    Cited by:

    1. Jürgen Von Hagen & Ingo Fender, 1998. "Central Bank Policy in a More Perfect Financial System," Open Economies Review, Springer, vol. 9(1), pages 493-532, January.
    2. James T. Moser, 1998. "Credit derivatives: just-in-time provisioning for loan losses," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 22(Q IV), pages 2-11.
    3. Ralph Chami & Connel Fullenkamp & Sunil Sharma, 2010. "A framework for financial market development," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 13(2), pages 107-135.
    4. Randall S. Kroszner, 2000. "The supply of and demand for financial regulation : public and private competition around the globe : commentary," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 137-149.

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    Keywords

    Risk; Derivative securities;

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