Evidence on the financial characteristics of banks that do and do not use derivatives

Sinkey, Joseph F.; Carter, David A.

doi:10.1016/s1062-9769(00)00050-8

Cited by 94 publications

(82 citation statements)

References 25 publications

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“…Moreover, they claim that bank managers tend to use derivatives when their equity share decreases, which is inconsistent with the results of Geczy et al (1997). Further, Sinkey and Carter (2000) who aim at finding the financial characteristics of U.S. banks, present evidence that non-user banks have more conservative and less risky 3 © 2017 AESS Publications. All Rights Reserved.…”

Section: Introductionmentioning

confidence: 90%

Derivative Use of Turkish Investment Funds During the 2008-09 Financial Crisis

Pirgaip¹,

Tasdemir²

2017

Asian Economic and Financial Review

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This paper centers on the question of how derivatives were utilized by investment fund managers in the course Contribution/ OriginalityThis study contributes in the existing literature in not only being the first study in Turkish capital markets that tries to explain derivative use in investment funds, but also being one of very few studies which investigates the role of derivatives in portfolio management throughout the 2008-2009 financial crises.

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Section: Introductionmentioning

confidence: 90%

Derivative Use of Turkish Investment Funds During the 2008-09 Financial Crisis

Pirgaip¹,

Tasdemir²

2017

Asian Economic and Financial Review

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“…Berkman and Bradbury, 1996;Ge´czy et al, 1997;Bodnar et al, 1998;Bartram et al, 2009). 7 (e.g., Whidbee and Wohar, 1999;Sinkey and Carter, 2000;Adkins et al, 2007). 8 Hoyt (1989).…”

Section: Motives For the Use Of Derivatives By Insurersmentioning

confidence: 99%

“…For instance, unlike their counterparts in the non-financial sector, managers in the banking industry with high equity holdings use less derivative hedging to capitalise on the risk-shifting opportunities provided by deposit (Whidbee and Wohar, 1999). Interested readers are referred to Whidbee and Wohar (1999), Sinkey and Carter (2000) and for banks, and Nance et al (1993) and Bartram et al (2009) for non-financial firms. In this paper, we will mainly focus on theories and evidence in insurance literature.…”

Section: Introductionmentioning

confidence: 99%

What Motivates Insurers to Use Derivatives: Evidence from the United Kingdom Life Insurance Industry

Shiu

2011

Geneva Pap Risk Insur Issues Pract

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Using firm-specific variables that proxy for the motivations of life insurers' decision to participate in derivative transactions, we examine existing theories of corporate hedging behaviour. Our findings support the evidence of previous research that risk management and scale factors explain the use of derivatives. We observe a substitution effect that insurers use on-balance-sheet hedging through structuring their assets and liabilities to reduce price risks.

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“…For instance, Gunther and Siems (1995) find that banks use derivatives to hedge rather than to speculate. Carter and Sinkey (1998), Gunther and Siems (1996) and Sinkey and Carter (2000) find that increases in the bank's use of interest-rate derivatives correspond to greater interest rate risk exposure. Whidbee and Wohar (1999) find that the corporate governance and ownership-structure of banks influences the bank's use of derivatives.…”

Section: Derivative Usage Backgroundmentioning

confidence: 99%

“…The greater the probability of distress or distress-induced costs, the greater the firm's benefits from hedging through the reduction in these expected cost. Additionally, Sinkey and Carter (2000) contend that the larger the debt relative to value, the higher the probability of bankruptcy, and the higher the likelihood that a bank will use derivatives to hedge.…”

Section: Derivatives Usage and Banks Efficiencymentioning

confidence: 99%