Interest Rate Risk Management in Major Finnish Firms

Antti Hakkarainen, Eero Kasanen and Vesa Puttonen

European Financial Management, 1997, vol. 3, issue 3, 255-268

Abstract: The interest rate policies of Finnish firms appear risk aversive, but hedging decisions are influenced by market view. Managers find they can forecast trends in interest rate development, and employ the forecasts in the choice of debt and hedging instruments. The use of risk assessment methods and hedging instruments are related to firm size but not to leverage. Most frequently employed hedging instruments are interest rate swaps and forward rate agreements. The respondents find their firms' interest rate risk management is successful, but performance is seldom measured against an explicitly defined benchmark.

Date: 1997
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