The Largest Pyramid Scheme of All Time: The Effect of Allowing Unregulated Credit Default Swaps
Austin Murphy
Oakland University - School of Business Administration
April 12, 2010
Abstract:
This research develops an analytical model of the incentives created by allowing credit default swaps to be contracted with virtually no regulation. The incredible growth in the volume of those financial contracts since they were deregulated in 2000, as well as the credit bubble and subsequent financial crisis that developed as a result, becomes clear within that explanatory framework.
Number of Pages in PDF File: 25
Keywords: credit default swap, financial crisis, debt insurance, credit spread
JEL Classification: G1
working papers series
Suggested Citation
Murphy, Austin, The Largest Pyramid Scheme of All Time: The Effect of Allowing Unregulated Credit Default Swaps (April 12, 2010). Available at SSRN: http://ssrn.com/abstract=1588089 or http://dx.doi.org/10.2139/ssrn.1588089
