Date of Submission
Campus Only Senior Thesis
Bachelor of Arts
The empty creditor problem leads investors to believe that creditors will be less likely to renegotiate lending terms due to the ability to invest in credit default swaps. Thus, making the process of bankruptcy less efficient for any company. Additionally, Hedge funds have been shown to improve the outcomes of the processes through empirical studies. In order to learn about the effect of both simultaneously, the paper looks at the recovery rates and outcomes when hedge funds are versus are not present in CDS cases. The findings show that there is a clear negative skew for recovery rates when hedge funds take a creditor position and a CDS market is available.
Husic, FJ, "Do Hedge Funds and Credit Default Swap Markets Shape Recovery Rates" (2021). CMC Senior Theses. 2871.
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.