Derivative Hedging Instruments and the Financial Performance of Non-Financial Companies Listed at the Nairobi Securities Exchange

Moses Wambua Mwathe (), PhD David Agong () and PhD Joshua Bosire ()

International Journal of Finance, 2025, vol. 10, issue 5, 20 - 33

Abstract: Purpose: This study looked at how swaps derivative instruments affected the performance of non-financial companies listed at Nairobi Security Exchange in Kenya. Methodology: The study employed behavioral finance theory to guide the examination of these financial tools. Data was collected from all the 15 non-financial institutions listed at NSE as per the 2022 NSE report. Information was collected from CBK. Purposive sampling was conducted since not all the companies utilized swaps derivative instruments. SPSS version 27 was used to analyze the data collected. Regression and inferential data were evaluated. Data was represented in forms of tables and graphs to portray a clear connection between financial derivatives and the financial performance of non-financial firms at NSE perform. Findings: The study found that swaps derivative instruments had a positive and significant correlation with financial performance, with swaps (r = 0.707, p = 0.000), showing strong associations with return on investment. Regression analysis confirmed its impact. The R-square value revealed that derivative instruments accounted for 58.21% variation in financial performance of non-financial firms listed at NSE. The F-statistic and the p-value further confirmed the findings (F=95.52, p-value=0.000). The coefficients were; swaps (β = 2.6866, p = 0.0411), confirming that swaps significantly influenced financial performance. Unique Contribution to Theory, Practice and Policy: Therefore, companies should implement internal control mechanisms to monitor swap transactions and ensure compliance with regulatory standards. The Capital Markets Authority (CMA) and financial institutions should facilitate training programs on swap contracts to improve firms’ understanding of their risks and benefits.

Keywords: Derivative Instruments; Financial Performance; Non-Financial Firms; Swaps; Financial Hedging (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://carijournals.org/journals/index.php/IJF/article/view/2744 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bhx:ojtijf:v:10:y:2025:i:5:p:20-33:id:2744

Access Statistics for this article

More articles in International Journal of Finance from CARI Journals Limited
Bibliographic data for series maintained by Chief Editor ().