Forward | View web version » |
|
|
|
Derivatives can be good for growth, says new Milken Institute study
"Deriving the Economic Impact of Derivatives" is the first-of-its-kind quantitative examination of financial derivatives' role in the U.S. economy. Focusing on credit extension and firm value, the study charts the net positive effects from their use in both the financial and non-financial sectors. For banks, our research shows, the use of derivatives allows for a larger volume of commercial and industrial loans, increasing business investment. The data also demonstrate that non-financial firms that hedge with derivatives are valued higher than firms that do not.
Highlights of the study's findings:
- Derivatives' use by financial and non-financial firms expanded quarterly real GDP by about $3.7 billion each quarter from 2003 to 2012.
- The total increase in economic activity was 1.1 percent, or $149.5 billion, during that time.
- By the end of 2012, employment had expanded by 530,400, or 0.6 percent, and industrial production 2.1 percent, due to the use of these instruments.
|
|
Other Recent Publications |
|
|
|
Insights from Institute Experts |
|
|
|
|
A nonprofit, nonpartisan economic think tank, the Milken Institute believes in the power of finance to shape the future. The Milken Institute produces rigorous, independent economic research-and maximizes its impact by convening global leaders from the worlds of business, finance, policy, academia, and philanthropy. By fostering collaboration between the public and private sectors, we transform great ideas into action. |
|
© 2014 Milken Institute | 1250 Fourth Street | Santa Monica, CA 90401 |
|
|