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The Impact of the Strategic Use of Financial Derivatives on the Effectiveness of Interest Rate Risk Management of Non-financial Firms in China

Cai, Wenyue LU and Yang, Xinxin LU (2024) BUSN79 20241
Department of Business Administration
Abstract
This study investigates the effectiveness of financial derivatives in managing interest rate risk for non-financial firms in China and analyzes the moderating role of market conditions in this relationship. Through an empirical analysis of panel data from non-financial firms listed on the Shanghai and Shenzhen stock markets between 2017 and 2022, the study finds that the use of financial derivatives significantly reduces firms' financial expense ratios, indicating their effectiveness in managing interest rate risk. Additionally, market volatility enhances the effectiveness of derivatives, underscoring the importance of strategic risk management in highly uncertain market environments. This research fills a gap in the existing literature on... (More)
This study investigates the effectiveness of financial derivatives in managing interest rate risk for non-financial firms in China and analyzes the moderating role of market conditions in this relationship. Through an empirical analysis of panel data from non-financial firms listed on the Shanghai and Shenzhen stock markets between 2017 and 2022, the study finds that the use of financial derivatives significantly reduces firms' financial expense ratios, indicating their effectiveness in managing interest rate risk. Additionally, market volatility enhances the effectiveness of derivatives, underscoring the importance of strategic risk management in highly uncertain market environments. This research fills a gap in the existing literature on the use of derivatives by non-financial firms, particularly in emerging markets, and provides empirical evidence for corporate decision-makers and policymakers. (Less)
Please use this url to cite or link to this publication:
author
Cai, Wenyue LU and Yang, Xinxin LU
supervisor
organization
course
BUSN79 20241
year
type
H1 - Master's Degree (One Year)
subject
keywords
Interest Rate Risk Management, Financial Derivatives, Non-financial Firms, Market Conditions, Emerging Markets
language
English
id
9167087
date added to LUP
2024-06-22 16:57:49
date last changed
2024-06-22 16:57:49
@misc{9167087,
  abstract     = {{This study investigates the effectiveness of financial derivatives in managing interest rate risk for non-financial firms in China and analyzes the moderating role of market conditions in this relationship. Through an empirical analysis of panel data from non-financial firms listed on the Shanghai and Shenzhen stock markets between 2017 and 2022, the study finds that the use of financial derivatives significantly reduces firms' financial expense ratios, indicating their effectiveness in managing interest rate risk. Additionally, market volatility enhances the effectiveness of derivatives, underscoring the importance of strategic risk management in highly uncertain market environments. This research fills a gap in the existing literature on the use of derivatives by non-financial firms, particularly in emerging markets, and provides empirical evidence for corporate decision-makers and policymakers.}},
  author       = {{Cai, Wenyue and Yang, Xinxin}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The Impact of the Strategic Use of Financial Derivatives on the Effectiveness of Interest Rate Risk Management of Non-financial Firms in China}},
  year         = {{2024}},
}