Managing Risk by Using Derivatives: The Case of Hong Kong Firms

Eden Yu, Ivan Chan Hung Chin, Henry Fu Yiu Hang and George Lo Chi Wai

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2001, vol. 04, issue 04, 417-425

Abstract: Hong Kong has been very active in developing new financial products. This paper examines how firms in Hong Kong have managed risks by using derivatives. We conducted a survey to find out what kind of and to what extent financial engineering tools are used. Our survey reveals that derivatives are widely used to reduce risks. Moreover, most companies take risk measurement prior to including derivatives in the portfolios. The value-at-risk model is the most widely used risk management technique, followed by scenario analysis. In addition, we compare these survey results with the recent results for firms in Shanghai.

Keywords: Risk management; Risk management practices; Survey results of Hong Kong firms using derivatives (search for similar items in EconPapers)
JEL-codes: G1 G2 G3 (search for similar items in EconPapers)
Date: 2001
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DOI: 10.1142/S0219091501000607

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