The Management of Greek Sovereign Risk

Chiara Oldani

MPRA Paper from University Library of Munich, Germany

Abstract: In 2010 the excessive public spending produced the first sovereign bond market crisis in Europe: Greece. The Hellenic crisis is the product of years of recession, of the sluggish economic environment and poor productivity – but above all it is the product of the mismanagement of the public finance, of unsatisfactory reporting, risk management and accounting practices. Information about Greece is scarce and fragmented, but the inability by European authorities to understand the incredible mismanagement strongly disappoints the taxpayer. The relevant exposure of European banks in the bond market toward the default risk of Greece supports the need for hedging tools, such as Credit Default Swaps. However, there is evidence that the CDS market on Greek sovereign bonds is segmented, and contracts are mis-priced. The lack of comprehensive data on CDS and other OTC contracts impedes any further investigation. European authorities should consider revising CDSs trading rules and requirements, until the risks produced are properly limited

Keywords: Greek crisis; Credit Default Swap; sovereign risk management (search for similar items in EconPapers)
JEL-codes: G2 H3 H6 (search for similar items in EconPapers)
Date: 2011-12
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in The UIP Journal of Financial Risk Management 4.VIII(2011): pp. 25-36

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/36195/1/MPRA_paper_36195.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:36195

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().