Definition

Credit Derivatives

Credit derivatives are financial contacts that are designed to protect a bank or other lending institutions against loss due to defaults on its loan or security holdings. This helps financial institutes like banks to reduce their credit risk exposure and in some cases interest risk exposure as well. Credit derivatives may be like credit swap, credit option, credit default swap etc.


Credit derivatives is the financial contracts that are designed to protect a bank or other lending institution against loss due to defaults on its loans or security holdings.

Share it:  Cite

More from this Section

  • Capital Markets
    Capital Markets are the financial markets in various countries in which various types ...
  • M2
    M2 is a measure of money that adds to M1: money market deposit accounts, money market ...
  • Product Mix
    Product Mix is the composite of products offered for sale by an organization. ...
  • Book runner
    Book runner is the managing underwriter for a new issue. The book runner maintains the ...
  • Methods to improve internal control process
    Common methods used by MNCs to improve their internal control process are. Establishing ...