Banks and Credit Derivatives

Minton, Stulz, and Williamson have an important look at banks' usage of credit derivatives. The short version? Very few banks are using them! In 2003, only about 6% of banks with over $1B in assets report using this form of derivatives. Consistent with what we have seen on other derviatve usage, these banks tend to be much larger than average. Best guess as for the low usage? Transaction costs