Credit Risk and Financial Regulations

Credit risk research examines why borrowers—from corporations to sovereign governments—are charged different interest rates depending on how likely they are to default, and how that perceived risk ripples through bond yields, credit spreads, and derivative instruments like credit default swaps. The work sits at the intersection of asset pricing and financial regulation, asking not only what drives the cost of credit but also how well institutions like rating agencies actually capture and communicate that risk to markets. A persistent open question is how much of the spread between risky and risk-free debt reflects genuine default probability versus illiquidity, investor sentiment, or regulatory distortions. Active research directions include understanding contagion in sovereign debt markets, the informational role of CDS markets relative to bond markets, and whether post-2008 regulatory frameworks have made credit risk more transparent or simply redistributed it.

Works

49,963

Total citations

408,467

Keywords

Credit Spread ChangesDefault RiskCredit Default SwapsBond YieldsCredit RatingsSovereign Debt