Abstract This chapter introduces negative externalities, i.e., costs incurred by a third party without the polluter having to pay compensation, and exemplifies them external of transport in Switzerland. Next, compares various policy instruments state can use address market failures dealing with externalities. Finally, role financial system is discussed, which counteract current failure connecti...

Financial and insurance theories explain that large widely-held corporations manage corporate risks if doing so is cost-effective to reduce frictional costs such as taxes, agency costs and financial distress costs. A large number of previous empirical studies, most in the U.S., have tested the hypotheses underlying corporate risk management with financial derivative instruments. In order to qua...

From an economic perspective, interest rates constitute key tools for decision making in the financial sector as they have micro and macro impacts, making its risk management a crucial matter. The LIBOR Market Model (LMM) uses the yield curve of the British interbank rate LIBOR (forward) as its basic input. Unlike models that use instantaneous rates, those involved in the LMM are observable in ...