Debunking Derivatives Delirium

6 Pages Posted: 12 May 2003

See all articles by Jeffery Gunther

Jeffery Gunther

Federal Reserve Banks - Federal Reserve Bank of Dallas

Thomas F. Siems

Federal Reserve Bank of Dallas - Research Department

Abstract

Banks have gotten a lot of bad press lately. Some commentators have gone so far as to declare a banking breakdown, brought on by the free market policies of the 1990s. At the heart of much of the controversy is the explosive growth in banks' use of the sometimes complex financial instruments known as derivatives.

Close examination, however, suggests the potential costs of derivatives are often exaggerated and their benefits downplayed. Moreover, recent data provide evidence that despite talk of a breakdown, the banking system has been remarkably resilient. Contrary to popular claims, the free market policies instituted in the 1990s have contributed to, rather than detracted from, the industry's stability.

JEL Classification: G2, A2

Suggested Citation

Gunther, Jeffery and Siems, Thomas F., Debunking Derivatives Delirium. Available at SSRN: https://ssrn.com/abstract=391823 or http://dx.doi.org/10.2139/ssrn.391823

Jeffery Gunther

Federal Reserve Banks - Federal Reserve Bank of Dallas ( email )

2200 North Pearl Street
PO Box 655906
Dallas, TX 75265-5906
United States

Thomas F. Siems (Contact Author)

Federal Reserve Bank of Dallas - Research Department ( email )

2200 N. Pearl Street
Dallas, TX 75201
United States
214-922-5129 (Phone)
214-922-6076 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
149
Abstract Views
1,310
rank
243,711
PlumX Metrics