Legitimacy in financial markets: credit default swaps in the current crisis
Morgan, Glenn. (2010) Legitimacy in financial markets: credit default swaps in the current crisis. Socio-Economic Review, Vol.8 (No.1). pp. 17-45. ISSN 1475-1461
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Official URL: http://dx.doi.org/10.1093/ser/mwp025
The current financial crisis appears to be a moment of epochal change, an archetypal ‘legitimation crisis’. This paper examines the impact of this collapse on one particular section of the financial markets that concerned with credit default swaps. This paper shows how and why the markets for these products expanded and why they were integral to the financial crash. The consequence of the crash was a huge loss of legitimacy for these markets. This paper examines the processes whereby this legitimacy is being reconstructed. In particular, it distinguishes between the re-establishment of pragmatic legitimacy, which is the primary concern of the market participants, and the re-establishment of broader political legitimacy, which concerns governments and regulators. It argues that these two forms of re-establishing legitimacy work in different ways and proceed at different rates. It explores the tensions to which this leads in terms of reconstructing the financial system.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HG Finance|
|Divisions:||Faculty of Social Sciences > Warwick Business School|
|Library of Congress Subject Headings (LCSH):||Global Financial Crisis, 2008-2009, Credit -- Management, Default (Finance), Credit control, Capital market, Swaps (Finance)|
|Journal or Publication Title:||Socio-Economic Review|
|Publisher:||Oxford University Press|
|Official Date:||January 2010|
|Page Range:||pp. 17-45|
|Access rights to Published version:||Restricted or Subscription Access|
AIG (2009) 'AIG discloses counterparties to CDS, GIA and securities lending transactions', press release accessed at www.aigcorporate.com/index.html on 15 March, 2009.
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