Abstract:
This contribution offers an explanation of credit derivatives as a group of financial instruments
having a common purpose being the managing of credit exposures, and thus credit or default risk. This
paper explores the links between their economic and financial manifestations and the legal bases for
their widespread application. To ensure an understanding of the purposes served by each of the main
types of credit derivatives, a detailed scrutiny of individual instruments is undertaken. Issues relating
law and economics to trading in this type of derivative are investigated, then pricing issues and
empirical evidence are considered. A summary brings together the range of features bearing upon the
effective development of a market in these financial instruments.
