Chaotic structure of CDS

After globalization processed most of the countries and the revolutionary developments in information technologies, financial investment flows have increased and investors have had the chance of investing in a large number of countries, sectors and assets. For a profitable investment, investors need an indicator to evaluate the risk level of a country. CDS is probably the most important indicator to show the riskiness of a country because CDS rate is calculated with a large scale view including both economic and political issues. In this study, LLE and Shannon Entropy tests were utilized in order to determine the chaotic behavior of CDS for the USA, Turkey and China. According to the results, all CDS series have chaotic dynamics. These results indicate that the selected countries have a risky nature.After globalization processed most of the countries and the revolutionary developments in information technologies, financial investment flows have increased and investors have had the chance of investing in a large number of countries, sectors and assets. For a profitable investment, investors need an indicator to evaluate the risk level of a country. CDS is probably the most important indicator to show the riskiness of a country because CDS rate is calculated with a large scale view including both economic and political issues. In this study, LLE and Shannon Entropy tests were utilized in order to determine the chaotic behavior of CDS for the USA, Turkey and China. According to the results, all CDS series have chaotic dynamics. These results indicate that the selected countries have a risky nature.