Derivative use, ownership structure and lending activities of US banks

Abugri, Benjamin A.; Osah, Theophilus Teye

doi:10.1007/s12197-020-09535-3

Cited by 2 publications

(1 citation statement)

References 55 publications

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“…Taking this into account, it can be stated that, in the case of financial institutions, the application of derivatives contributes to risk reduction, which can lead to an increased level of bank lending. For example, Abugri and Osah (2021) identified that, based on Diamond's systematic risk mitigation theory, the use of derivatives is positively related to lending growth (Abugri and Osah, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

Assessment of the impact of the usage of derivatives on the company’s value

Šimaitė

Keliuotytė-Staniulėnienė

2022

FMIR

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During periods of increased uncertainty, financial market participants are looking for ways to manage risk. The derivatives can be considered as one of the potential instruments for hedging risk. There is no consensus in the scientific literature on whether the application of derivatives has an impact on a value of a company. Thus, the main purpose of this paper is to quantitatively assess the impact of the application of derivatives on the value of a company. The research hypothesis is formulated as follows: the use of derivatives increases the company’s value, i.e. the application of derivatives has a statistically significant positive impact on the value of the company. Seeking to achieve the main purpose and test the hypothesis, besides the analysis of relevant academic literature, the method of panel data analysis (linear multiple regression) is used to quantitatively assess the effect the application of derivatives has made on the company’s value. 28 companies (constituents of EURO STOXX 50 ESG Index) are analyzed in the period of 2005-2020. The results of the research allow stating the effect of derivatives on the value of companies has proven to be statistically significant and positive.

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Section: Literature Reviewmentioning

confidence: 99%

Assessment of the impact of the usage of derivatives on the company’s value

Šimaitė

Keliuotytė-Staniulėnienė

2022

FMIR

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Hedge accounting usage and capital investment: European evidence under IFRS requirements

Allini,

Maffei,

Santonastaso

et al. 2024

J Manag Gov

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We investigate the effects of hedge accounting usage on firms’ level of capital investment. Analyzing a set of 286 public firms in the European Union during the period 2016–2019, our findings are threefold. Firstly, we provide evidence that firms which apply hedge accounting under IFRS requirements increase their level of capital investment more than firms that do not exploit these accounting principles. Second, we also suggest that this link is mediated by the earnings volatility mitigation. Lastly, we find that such a relationship is exacerbated after the IFRS 9 implementation period, consistently with the view that the newest hedge accounting rules provided by the IASB are recognized to be more effective and more beneficial for firms, comparatively to IAS 39. These results are robust to different measures of capital investment, alternative models’ specifications, and after correcting for potential endogeneity concerns. We contribute with the first empirical study that explores the role of hedge accounting on investment behavior under different IFRS requirements. This research is valuable for standard setters and regulators to understand how their accounting requirements may affect firms’ economic decisions. From a managerial point of view, our study offers particular insights into hedge accounting mechanisms and practical implications about the role of accounting choices in real investments’ decision-making.

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Derivative use, ownership structure and lending activities of US banks

Cited by 2 publications

References 55 publications

Assessment of the impact of the usage of derivatives on the company’s value

Assessment of the impact of the usage of derivatives on the company’s value

Hedge accounting usage and capital investment: European evidence under IFRS requirements

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