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Session 4.02: Mandatory Central Clearing and Derivative Offsetting
Time:
Tuesday, 26/Aug/2025:
9:30am - 10:00am
Location:Tosca Conference hall
Meeting hall “Tosca”, which can accommodate up to 60 people
Presentations
Mandatory Central Clearing and Derivative Offsetting
Prof. John Zhang
Audencia Business School, France
Exploiting the adoption of mandatory central clearing by U.S. regulators, we explore the effects of this regulatory reform on banks’ derivative offsetting. Using a triple-difference testing procedure, we find that derivative offsetting increases (decreases) for banks with higher (lower) capital ratios after the adoption of mandatory central clearing, in comparison to the control group. The results are economically significant and robust to a variety of alternative measurements and tests. Our findings suggest banks with different target capital ratios respond to central clearing reform differently.
