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Financial Derivatives - Meanings Beyond Subprime Crisis Stigma

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  • FELICIA RAMONA BIRAU

    (UNIVERSITY OF CRAIOVA,FACULTY OF ECONOMICS AND BUSINESS ADMINISTRATION CRAIOVA, ROMANIA)

Abstract

Derivatives are designed as complex financial instruments and their main aim is to manage the risk associated with the underlying asset, in order to ensure against fluctuations in value, or to profit from periods of inactivity, instability or decline. In recent years financial derivatives have experienced a fulminant development and also they have been perceived as an effective lever of the modern economy. The subprime crisis was triggered by a quite significant financial infrastructure glitch, which coalesced around certain factors influence, such as : highly permissive regulation of financial markets, speculative bubbles, underperforming risk management, liquidity injections and structural imbalances. Despite the fact that is a innovative segment and quite difficult affordable as understanding level of the operation mechanisms, financial derivatives were only the tool triggering this global dimension crisis.

Suggested Citation

  • Felicia Ramona Birau, 2012. "Financial Derivatives - Meanings Beyond Subprime Crisis Stigma," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 195-199, December.
    • Handle: RePEc:cbu:jrnlec:y:2012:v:4ii:p:195-199
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    References listed on IDEAS

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