One of the major risks faced by banks is that of credit risk. This 7 page paper proposes a project to examine how macro derivatives may be used to reduce credit risk. The paper consists of an introduction, methodology and a lengthy sample literature review focusing on the ways in which credit risk is currently managed. The bibliography cites 7 sources.
Name of Research Paper File: TS14_TEcreditder.rtf
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of the major risks faced by banks is that of credit risk. To ensure that banks remain within their own set levels of capital adequacy and those laid down by
statute the ability to manage and reduce credit risk with differing tools is of great importance. One set of tools which may be argued as having potential benefit in the
managements of credit risk are macro derivatives. The ability to determine the ways in which credit risk can be reduced will be both theoretically interesting as well as very valuable
to banking organisation across the globe. 2. Methodology The methodology will consist of several stages. The first is an in-depth literature review that outline the current credit risk assessment tools
that indicate the type and level of risk faced by banks. The data will need to be taken from a range of sources, including academic journals, existing dissertations and research
projects and industry reports. This will give a strong foundation concerning the level of existing research. The project will then have to move onto the primary research. There are
several methods that can be chosen, this project is based on the way that the macro derivatives may be used we can look for specific case studies to identify how
these have and may be applied, Scenario may be used with the development of mathematical models that are then applied to the way in which credits risks appear and are
managed into days market. The model may be adjusted for different identified elements and credit risks. This may be tested with either qualitative or quantitative data dependant on the choice
of the student following the in-depth literature receive. However, if a qualitative approach is taken this should be based on several rather than a single case study. In most
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