Financial markets represent one of the most complex environments for business and there are a lot of types of external factors which impact their dynamics. The recent financial turbulence materialized by the global financial crisis 2008-2009 and the European sovereign debt crisis (2010-2012) made serious pressure on financial markets that proved their fragility and sensitivity in a different ma...

This paper presents a model, where infinitely lived agents face incomplete markets for both aggregate and idiosyncratic risks. In this economy, agents trade derivative assets to diversify the aggregate risk they face. We are able to characterize analytically the general equilibrium, which allows us to explain the informational content of the derivative volumes in the business cycle, from a macr...

The views expressed in this paper are those of the authors and not necessarily those of the Federal Reserve Bank of Chicago or the Board of Governors of the Federal Reserve System. Abstract This paper critically reviews the literature examining the role of central banks in addressing systemic risk. We focus on how the growth in derivatives markets might affect that role. Analysis of systemic ri...

The widespread use of innovative financial transactions in international financial market in recent years is primarily driven by the need for greater financial risk management by businesses and financial investors. Many related factors have contributed to the needs of business for more sophisticated financial instruments, as well as to the financial world’s technological ability to meet that de...

Both auditors and credit rating agencies have been linked to financial scandals in recent history. In the early 2000’s, several of the “big five” accounting firms issued favorable audit opinions to public companies employing deceptive accounting practices. Some of these companies even committed outright fraud. Once the investing public caught wind of these accounting irregularities, it lost tru...

Trading a financial asset pushes its price as well the prices of other assets, phenomenon known cross-impact. The empirical estimation this effect on complex instruments, such derivatives, is an open problem, tackled in issue?s cover article ?Cross-impact Derivative Markets? by Michael Benzaquen, Mehdi Tomas and Iacopo Mastromatteo. To address this, authors consider setting which derivatives de...

A dynamic development of financial market is accompanied by the emergence of new products on stock exchanges which give absolutely new possibilities of investing money. Currently, the most innovative financial instruments offered to investors are exchange traded products (ETP). They can be defined as financial instruments whose price depends on the value of the underlying instrument. Thus, they...

Purpose: This article aims to analyze the influence of certain characteristics board directors and auditor on disclosure derivative financial instruments. Theoretical framework: Operations with instruments are associated high risks, so these operations their results helps reduce information asymmetries. On other hand, acccording agency theory, can affect quality level disclosed. Design/methodol...

The extreme volatility of electricity prices makes its financial derivatives important instruments for asset managers. Even if the volume of derivative contracts traded on Power Exchanges has been growing since the inception of the restructuring of the sector, electricity remains considerably less liquid than other commodity markets. This paper assesses the effect of limited liquidity in power ...