The last financial crisis showed that the world economy is globally exposed to all kinds of risks. When equity and real estate markets capture the creation of global wealth, derivatives markets make it possible to value and transfer risk. Hedging and speculation are the main motivations of the participants who buy and sell the numerous products traded in these markets. Following Robert Shiller’s writings, this chapter aims to show that these markets, whether organized or not, may provide new ways to manage most of the risks both firms and individuals are facing. However, at the same time, huge risk transfers may foster speculation and lead to new systemic risks, as revealed by the credit derivatives market in recent years. This paper considers how the financial markets can better serve people (individuals, long investors, funds) in the context of the current economic situation.
BARONI, M. (2012). Financial Markets: A Tool for Transferring and Managing Risk? In: Free Markets and the Culture of Common Good. 1st ed. Springer, pp. 153-164.