Benefits, Risks and Opportunities of Financial Derivatives in Bangladesh

Abstract

The paper explains the essence of derivatives and identifies the different types of that exist. The article examines the technologies of credit derivatives application in the financial markets, especially the most common ones, credit default swaps. Both positive and negative aspects of their application to risk management have been revealed. Moreover, the grounds for their considering to be responsible for the global crisis aggravation have been identified. The prospects of CDS utilization in the development of a new global financial order have been illustrated. The paper briefly explains how derivative activity level can be monitored and then takes a look at the benefits, risks and opportunities of derivative in Bangladesh.