Deriving value or risk? Determinants and the impact of emerging market banks’ derivative usage

Jad Bazih and Dieter Vanwalleghem
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Jad Bazih: ESC [Rennes] - ESC Rennes School of Business
Dieter Vanwalleghem: ESC [Rennes] - ESC Rennes School of Business

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Abstract: This paper examines the determinants of the emerging market banks' derivative usage and the impact of derivative usage on bank value, total risk and bank stability. Our empirical evidence first suggests that derivative usage is driven primarily by net interest margin, bank concentration and institutional strength. In addition, although derivative usage appears to reduce emerging market bank value, it does not affect total risk. Moreover, emerging market banks can reduce bank instability using derivatives. Our findings have important implications for investors and policy makers focusing on emerging derivatives markets.

Keywords: Banks; Derivatives; Emerging markets (search for similar items in EconPapers)
Date: 2021-04
New Economics Papers: this item is included in nep-fdg and nep-rmg
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Published in Research in International Business and Finance, 2021, 56, pp.101379. ⟨10.1016/j.ribaf.2020.101379⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03329217

DOI: 10.1016/j.ribaf.2020.101379

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