tailieunhanh - Credit risk management in the financial markets

The main task of the financial system is to ensure the flow of resources from sectors with an excess of funds to those with a gap in funds. The developments of the past twenty years in particular, have paved the way for new turnovers in the field of finance and with the globalization phenomenon, foreign capital flows are transported rapidly to the farthest corners of the world. In addition, more complex market structures emerge on the agenda as well as complex financial tools and crises and their impact becomes more permanent. | Journal of Applied Finance Banking vol. 4 no. 4 2014 107-125 ISSN 1792-6580 print version 1792-6599 online Scienpress Ltd 2014 Credit Risk Management in the Financial Markets Mehmet Nar1 Abstract The main task of the financial system is to ensure the flow of resources from sectors with an excess of funds to those with a gap in funds. The developments of the past twenty years in particular have paved the way for new turnovers in the field of finance and with the globalization phenomenon foreign capital flows are transported rapidly to the farthest corners of the world. In addition more complex market structures emerge on the agenda as well as complex financial tools and crises and their impact becomes more permanent. Taking into consideration the dimensions global financial markets have reached it is evident that problems occurring from the inefficiency of financial risk management have continued to grow. The search for a solution to risk management in the financial markets - and particularly credit risk management and its application - has gained importance. With reference to these determinants our study focuses on credit risk and management and while the Basel III standards are the topic of discussion in terms of risk activities for the banking sector an inquiry is made into how effective the models and arrangements put forth to prevent risk are. JEL classification numbers G18 G32 F30. Keywords financial markets risk management credit derivatives markets Basel standards. 1 Financial Markets Markets are places where buying and selling procedures are carried out and explained as based on a consensual exchange of goods and services Hahnel 2002 . Financial markets are mechanisms which enable the realization of capital and credit in the economy. At this point the financial markets separate into both money and capital markets. While the Money markets comprise short term loans the capital markets represent long term debt instruments. The stock market bond market .