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1
Kirillova, Oksana, and Ellina Emelyanova. "Risk management of derivative financial instruments." International Review, no. 1-2 (2021): 89–98. http://dx.doi.org/10.5937/intrev2102091k.
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The subject of the study is derivative financial instruments. At the beginning of the article, the concept of a derivative financial instrument (PFI) is considered, their advantages and disadvantages are given, after which the risks of operations carried out with PFI are formulated. Further, the article discusses the main problems inherent in the PFI market and suggests a number of measures to solve these problems. In conclusion, recommendations are made that will allow for faster development of the Russian market of financial derivatives.
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Novak, Oksana, Tetiana Osadcha, and Oleksandr Petruk. "CONCEPT AND CLASSIFICATION OF DERIVATIVE FINANCIAL INSTRUMENTS AS A METHODOLOGICAL PRECISION ON THEIR REGULATION IN THE FINANCIAL SERVICES MARKET." Baltic Journal of Economic Studies 5, no. 3 (August 1, 2019): 135. http://dx.doi.org/10.30525/2256-0742/2019-5-3-135-144.
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The urgency of the research topic is caused by the rapid growth of capital markets and the emergence of all new financial instruments, the complexity of their structure and the transition beyond the regulatory influence of supervisory authorities. Discussion issues on the identification of derivatives, as well as their certain types, create significant problems with their valuation, the correctness of accounting, and the application of regulatory measures. Inconsistency in the interpretation of derivative financial instruments nature and their certain types is also present in domestic legal acts. Therefore, until the elimination of these shortcomings, derivative financial instruments create additional risks for their owners – financial institutions, as well as for creditors and depositors. The purpose of the research, conducted in the article, lies in the clarification of derivatives nature and developing an appropriate classification of their types in order to its further use with a view of regulation. The methodological basis of the research. The methodological basis of the study is a dialectical approach to the understanding of the essence of derivative financial instruments; general scientific methods of knowledge of phenomena and processes (monographic, abstract-logical, synthesis, comparison, generalization), analysis of legal acts in the part of treatment of derivatives, derivative financial instruments and derivative securities, methods of grouping systematization and generalization in developing the classification of derivative financial instruments. Scientific results. It has been established that in order to maintain the stability of financial markets and their participants, the transformation of regulatory measures should be a permanent development and modification of the financial instruments that are being rotated. Various approaches to the interpretation of derivative financial instruments essence in normative legal acts and scientific literature have been analysed in order to improve the regulation of their issuance and circulation. This made it possible to streamline the conceptual apparatus and to group certain types of derivatives according to certain classification grounds. The basis for classification is the concept of “derivative financial instruments” as the broadest, which includes derivative securities and term contracts (derivatives). The concept of derivatives and derivative securities are delimited based on the study of terminology. It was established that derivatives are standard documents that certify the right and/or obligation to purchase or sell future securities, tangible or intangible assets, as well as funds or make payments on terms and conditions specified by them. However, in some cases, derivatives may acquire features of derivative securities, in particular, when issued through emission and freely traded in markets and bring income (losses) to their owner as a result of changes in their market value. The practical significance. The practical value of the research is the possibility of using the developed classification for the needs of emission regulation and the circulation of derivative financial instruments.
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Yunusova, Leysen. "Analysis of Options Pricing Methods: the Black-Scholes Model and the Monte-Carlo Method." Scientific Research and Development. Economics of the Firm 9, no. 3 (October 7, 2020): 39–42. http://dx.doi.org/10.12737/2306-627x-2020-39-42.
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Currently, the market of financial instruments is quite developed. Traditional financial instruments prevail on the Russian market, while derivatives of these financial instruments (options, futures, forwards, bills, etc.) are faintly developed. The reason for this situation is that few participants in the financial market can correctly evaluate financial products. Scientific researchers and large companies use different methods of estimating the value of financial instruments in making strategic investment decisions, since incorrect calculations can be irreparable. Therefore, it is important to apply the appropriate pricing methodology to various derivative financial instruments. The topic of derivative financial instruments in terms of scientific and theoretical aspects has been worked out in sufficient volume, but as for the pricing of these instruments, there are some gaps. There is still no method for pricing derivatives that would allow you to accurately assess the value of financial instruments for subsequent effective investment decisions. In this article considers the methodology of pricing of derivative financial instruments using the Black-Scholes model and the Monte Carlo method. The presented estimation methods allow us to calculate the range of price values that allows us to provide the most accurate expected results.
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Druzhilovskaya, T. Yu, and N. A. Dobrolyubov. "Methodological approaches to accounting for financial instruments: Current issues and advisable solutions." International Accounting 23, no. 6 (June 16, 2020): 604–26. http://dx.doi.org/10.24891/ia.23.6.604.
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Subject. The article discusses the way financial instruments are accounted for, and related issues. Objectives. We outline our recommendations to address problems concerning the financial instruments accounting technique. Methods. The study involves a critical analysis, synthesis, comparison, observation, analogies. Results. We prove the inadequacy of the regulatory framework for accounting for financial instruments of the Russian non-credit institutions. As discussed in the scientific literature on accounting for financial instruments, advisable methodological approaches were found to vary significantly. We justify our recommendations on addressing challenging issues of accounting for non-derivative and derivative financial instruments and provide our suggestions on accounting for financial assets qualified as cash equivalents, advice on separate accounting and recognition of financial liabilities, recognition of financial derivatives in accounts. Conclusions and Relevance. Currently, Russia's regulations govern only some issues of accounting for financial instruments. There are plenty of accounting aspects concerning derivative and non-derivative financial instruments that remain unregulated. As proposed in the scientific literature on accounting for financial instruments, methodological approaches significantly differ. International standards do not exhaustively govern complicated issues of accounting for financial instruments. Thus, research on accounting for financial instruments should continue. It is important to promote the regulatory framework for financial instruments accounting as long as a set of the Russian accounting standards are revised. The findings are of applied and theoretical nature for financial accounting.
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Latvytė, Ernesta, and Raimonda Martinkutė-Kaulienė. "APPLICATION OF AIR DERIVATIVE FINANCIAL INSTRUMENTS IN LITHUANIAN ECONOMY." Mokslas - Lietuvos ateitis 12 (August 13, 2020): 1–9. http://dx.doi.org/10.3846/mla.2020.12510.
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The paper explores the concept of weather derivatives: what it is, what its features are, and in what areas they can be applied. It has been established that there can be several types of weather derivative instruments – options and swaps. The use of weather derivatives has also been found to be very broad and attractive for tourism, construction, agriculture and heating companies. Companies operating in Lithuania do not use weather derivatives, although they do provide insurance against the risks associated with adverse weather conditions. The paper is conducting a study to determine which heating companies should apply weather derivatives to improve their performance. The study is conducted using multi-criteria assessment methods – SAW and TOPSIS. The multi-criteria assessment showed that AB Šiaulių energija and UAB Varėnos šiluma could use the opportunity to apply weather derivatives in their activities.
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Waswa, Mercelline Nafula, and Dr Joshua Matanda Wepukhulu. "EFFECT OF USAGE OF DERIVATIVE FINANCIAL INSTRUMENTS ON FINANCIAL PERFORMANCE OF NON-FINANCIAL FIRMS." International Journal of Finance and Accounting 3, no. 2 (October 2, 2018): 1. http://dx.doi.org/10.47604/ijfa.724.
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Purpose: The purpose of this study is to examine the effect of derivative financial instrument utilization on the financial performance of non-financial firms recorded at the Nairobi Securities Exchange. The objectives that guided this study are to assess the impact of use of derivatives in risk management on financial performance of non-financial firms listed on the Nairobi Securities Exchange (NSE).
Methodology: The study embraced the regression model. A census of all the 47 non-financial firms listed at the NSE as at December 2017 constituted the target population where only 11 listed non-financial firms were financial derivative instruments users. The study utilized qualitative and quantitative research techniques especially the utilization of descriptive research design. The data for this study was collected using questionnaires, audited financial statements and annual reports of individual firms for the multi year time frame covering 2013-2017 (the two years comprehensive).
Results: The study discovered that greater part of the firms (66.67%) utilizes Forwards, 22.22% utilize Swaps and 11.11% utilize Futures and Options for financial risk management. From the study the outcomes were as per the following: presence of debt in the financial structure of the non-financial firms listed at the NSE does not influence its financial performance as estimated by return on assets (ROA), use of derivatives in efficiency in trading influences the financial performance of the firms, use of derivatives in price stabilization is statistically significant and utilization of derivatives in price discovery does not influence the financial performance of the firms. By and large, the performance of the recorded non-financial firms at the NSE amid the time of study was 8.13 with a standard deviation of 10.67.
Unique contribution to Theory, Practice and Policy: The study recommended that firms should combine both debt and equity in their financial structure. It is therefore incumbent on firms’ managers and financial advisors to continuously study the market and advice on the appropriateness of the proportions of the various sources of finance based on market circumstances at any given time.
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Vygovskyy, O. "LEGAL NATURE OF DERIVATIVES AND DERIVATIVE SECURITIES AS FINANCIAL MARKETS INSTRUMENTS." Actual Problems of International Relations, no. 137 (2018): 58–64. http://dx.doi.org/10.17721/apmv.2018.137.0.58-64.
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The article reveals the issues of legal nature of derivative securities and derivatives as financial instruments, their characteristic features in comparison with ordinary securities, explores theoretical background for their differentiation and distinct qualification of these two different legal categories. The author of the article analyzes broad and narrow interpretation of the concept of a derivative security in doctrinal and practical dimensions, specific features of derivatives as standardized financial contracts and outlines their key attributes which allows to distinguish them from similar instruments. This article also deals with an important theoretical issue concerning the possibility of qualification of depositary receipts as derivative securities, taking into consideration the distinctive features of legal relationship arising in the area of issue and trading in depositary receipts.
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Firmansyah, Amrie, and Eko Bayu Dian Purnama. "Do Derivatives Instruments Ownership Decrease Firm Value in Indonesia?" Riset Akuntansi dan Keuangan Indonesia 5, no. 1 (April 24, 2020): 1–9. http://dx.doi.org/10.23917/reaksi.v5i1.9817.
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This research aims to examine the association between derivatives instruments and firm value. This research is quantitative research with multiple linear regression models and panel data. The sample employed in this research is non-financial companies listed on the Indonesia Stock Exchange (IDX). The type of data used in this study is secondary data sourced from financial statements, stock price information, and annual reports from 2012 to 2017. The sample selection using a purposive sampling method with the number of samples amounted to 246 firm-year. The result of this study suggests that a derivatives instrument is not associated with firm value. Investors in Indonesia do not consider ownership of derivative instruments by companies whether those are harmful of not for the investment impact. Also, derivatives do not have an official market in Indonesia as well as investors also do not understand the purpose of derivative ownership by companies.
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Zeng, Tao. "Derivative financial instruments, tax aggressiveness and firm market value." Journal of Financial Economic Policy 6, no. 4 (October 28, 2014): 376–90. http://dx.doi.org/10.1108/jfep-02-2014-0013.
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Purpose – The purpose of this study is to examine the relationship of using derivative financial instruments, tax aggressiveness and firm market value. Design/methodology/approach – This paper develops analytical models and designs an empirical study. Findings – Using data from large Canadian public companies, this paper finds that a firm’s realized losses or unrealized gains from using derivatives are negatively associated with its effective tax rate, and a firm’s realized losses or unrealized gains from using derivatives are positively associated with its market value. Research limitations/implications – This study simplifies the analytical model by separating the firm’s intrinsic market value from the tax-timing option value. In a more general framework, the tax-timing option value could be subsumed in the firm’s market value, and the firm’s market value would be determined endogenously. Originality/value – This study develops a framework to show how firms exploit the tax-timing option by using derivatives. It is the first study to conclude that a motive for firms to use derivatives is to exploit the tax-timing option.
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Patrick Raines, J., and Charles G. Leathers. "Financial derivative instruments and social ethics." Journal of Business Ethics 13, no. 3 (March 1994): 197–204. http://dx.doi.org/10.1007/bf02074819.
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Shichalina, Valeriia Alekseevna. "ABOUT IMPROVEMENT OF THE CONCEPTUAL APPARATUS OF DERIVATIVES IN THE ASPECT OF ACCOUNTING." Scientific Bulletin: finance, banking, investment., no. 2 (51) (2020): 246–53. http://dx.doi.org/10.37279/2312-5330-2020-2-246-253.
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The importance of financial information for a company is an important element of its integrity, financial autonomy, as well as recognition of its entrepreneurial freedom and sovereignty of economic decisions made. Taking into account the importance of the financial report, the international business community has identified principles for the preparation and presentation of this information, which are mandatory for all participants in the financial activities of the company: relevance, reliability, comprehensibility, materiality, truthful presentation, completeness, transparency. However, due to the increasing role of risk and uncertainty at the present time, business participants are forced to resort to new ways of doing entrepreneurial activity, performing managerial corporate operations, which, on the one hand, should be financially legitimate, and on the other hand, be a management cunning and ingenuity with a positive financial result. That is why interest in derivative financial instruments has increased. There is a contradiction, namely: in the conditions of economic instability, enterprises and participants in economic activity, in order to minimize financial risks, use derivative financial instruments to hedge the assets of the organization, thus acquiring the most risky asset. After all, derivative financial instruments are themselves recognized as the most risky instruments. However, existing accounting practices in the area of derivatives do not meet the growing needs of the business for corporate control and management and financial accounting. Leading a discussion about the accounting of derivatives is not new. Many authors are engaged in developments in accounting for derivatives, such as: Zhitlukhina O.G., Astakhova Yu.A., Tarasova Yu.A., and others. But despite this, and also due to the observed growth in enterprise risk management and the increasing interest in derivatives by company management, this article discusses an important controversial aspect of the recognition of derivatives as financial accounting entities. The work is devoted to improving the definition of derivatives in the aspect of accounting, recognition of their transactions. An analysis of existing developments was also carried out and on the basis of this, the author’s definition was proposed.
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Burdenko, I. "THE ORIGIN OF SPECULATIVE CAPITAL AND DERIVATIVE FINANCIAL INSTRUMENTS AND THEIR ROLE IN FINANCIAL CAPITAL CIRCUIT." Vìsnik Sumsʹkogo deržavnogo unìversitetu, no. 3 (2019): 46–52. http://dx.doi.org/10.21272/1817-9215.2019.3-6.
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Financial capital, which functions separately from real capital, in violation of the persistent historical and economic interdependence between them, which is manifested in the redistribution of value created by real capital through financial capital, is fictitious. Experts believe that the share of speculative capital in world financial flows is approximately 85%, and only 15% is from the real economy sector. In the context of globalization and the widening gap between real and financial capital, which affect the firmness and stability of the financial system, the process of generating fictitious capital, especially in times of instability and crisis, speculative capital is given priority and derivative financial instruments are a form of its realization. The rapid development of derivative financial instruments, within the limits of the global economy, has changed, apart from the ratio of speculative to real capital, also basic perceptions of the traditional phases of society development, the division of economic sectors and types of capital, which serves them through financial markets. At the same time, the creation of derivative financial instruments provided a deeper goal – objectification of an abstract risk. This is what defined and defines the nature of global capital flows through these financial instruments and what distinguishes this class of financial derivatives in from commodity derivatives in. The article defines the place of speculative capital as a form of fictitious capital through the lens of highlighting the phases of development of society, the division of sectors of the economy and the types of capital that serves them.Derivative financial instruments have been proven to be a qualitatively new form of both fictitious capital and speculative capital, which is in circulation in the tertiary financial market and serves the needs of the tertiary and quaternary sectors of the economy in the post-industrial stage of world economic development. The origin and main characteristics of speculative capital have been identified. Keywords: financial market, financial capital, fictitious capital, speculative capital, derivative financial instruments.
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Petruk, Oleksandr, and Oksana Novak. "State and Prospects of Using the Сryptocurrency Derivatives." Accounting and Finance, no. 3(89) (2020): 60–65. http://dx.doi.org/10.33146/2307-9878-2020-3(89)-60-65.
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The emergence and rapid development of the cryptocurrency market necessitated its organization and legal regulation. Today in Ukraine, businesses are allowed to record cryptocurrency as a financial asset (financial instrument / intangible asset), so cryptocurrency can be used by businesses and individuals as an investment. In developed countries, where the legal framework for the operation of cryptocurrencies has been created, new derivative financial instruments are emerging: Bitcoin futures and options on Bitcoin futures. The purpose of the article is to study the features of derivative financial instruments for cryptocurrencies and prospects for their use in Ukraine. The authors analyzed the peculiarities of the functioning of Bitcoin derivatives on Chicago Mercantile Exchange (CME). It has been established that both Bitcoin futures and options on Bitcoin futures are settlement contracts without the actual delivery of the underlying asset, and their value is formed depending on the spot prices for bitcoin. According to the results of the study, it can be argued that derivatives based on cryptocurrencies (bitcoin) are used mainly for speculative purposes, are highly volatile and high risk, require significant investment to participate in trading (compared to derivatives on traditional financial instruments) and do not involve any transactions with direct cryptocurrencies. Domestic legislation does not explicitly prohibit investments in cryptocurrencies and financial instruments derived from them, but does not determine the legal status of cryptocurrencies. National financial market regulators do not provide any guidance on valuation, accounting and cryptocurrency transactions to businesses, but only warn of the high risks of investing in cryptocurrencies.
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Rossiina, Nina S. "DERIVATIVE FINANCIAL INSTRUMENTS, THEIR RISKS AND THE POSSIBILITY OF USING THEM IN THE REGIONAL ECONOMY." Social and Political Researches 9, no. 4 (2020): 106–20. http://dx.doi.org/10.20323/2658-428x-2020-4-9-106-120.
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The market of derivative financial instruments as a market for contracts for a specific underlying asset (commodity, currency, interest rate, loan debt, etc.) is an area of close interest of researchers, which indicates not only its exclusive role among other sectors of the financial market, but also a significant amount of risks that require careful analysis and evaluation. Presentation characteristics of derivative financial instruments, clearly focused on providing appropriate information to prospective beneficiaries at all stages of both the appearance and existence of derivatives, focused on the possibility of overcoming the risks of investment investments. However, there was no specification of entities that take on the consequences of unfavorable loss-making situations based on the results of operations on the derivatives market. The review analysis shows that real losses are incurred either by representatives of the real sector of the economy, or by hedgers, or by insufficiently successful participants in professional activities in the field of operations with derivative financial instruments. The researchers of the sphere of operations with derivative financial instruments, the tasks of clarification and justification of the essential characteristics, role, functions of derivatives market as at the macro economic level and at the level of the regional economy; the study of logic, laws and patterns of the presence of the derivatives market in the financial relations system of the country as a whole and its regions; justification of the need to identify criteria for assessing the impact of the derivatives market on the stability of the economic system of the Russian Federation and the country's regions; regulatory and legislative regulation and risk management at all levels.
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Vasina, E. V. "DEVELOPMENT OF DERIVATIVE MARKET IN 2000-2012." MGIMO Review of International Relations, no. 3(36) (June 28, 2014): 88–95. http://dx.doi.org/10.24833/2071-8160-2014-3-36-88-95.
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At the end of XIX century futures exchange emerged, in the early 70-ies XX century - option exchange of financial derivatives. These exchanges gave a huge boost to the development of market of the operations with derivative financial instruments. In fact, in the 1970-1980-ies a new market segment was actually formed - the stock and financial derivatives. Trade in financial derivatives began in the OTC market, which accounts for most of the trade of derivatives. Today volumes of the OTC market of derivatives are several times greater than the volume of world trade and world GDP. From 2000 to 2007 derivative OTC market grew rapidly. In 2007-2008 there is a decline in trade of derivatives, but already in 2009 the world market of OTC derivatives returned to pre-crisis growth rates. Among all the instruments of the OTC market of derivatives swaps on interest rates stand out in the volumes, which even in the crisis of2007-2008 slightly, but increased. Analysis of indicators of the global OTC market of derivatives reveals the predominance of instruments on interest rates: their share in the total world market in 2012 amounted to about 77%. If we consider the structure of the OTC market of derivatives on type contracts, in 2012 most of the contracts (66%) belonged to the swaps. As regards the structure of the world market of exchange derivatives, in 2012 the options had the largest share - 54 %, futures accounted for 46 %. Among all the exchange instruments on interest rates held 92%.
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Oktavia, Oktavia, Sylvia Veronica N. P. Siregar, and Chaerul D. Djakman. "DAMPAK PENERAPAN PSAK NO. 50 DAN 55 (REVISI 2006) TERHADAP FORWARD EARNINGS RESPONSE COEFFICIENT DAN RELEVANSI NILAI DARI DERIVATIF KEUANGAN: (STUDI EMPIRIS PADA PERUSAHAAN KEUANGAN YANG TERDAFTAR DI BURSA EFEK INDONESIA)." Jurnal Akuntansi 21, no. 3 (November 2, 2017): 373. http://dx.doi.org/10.24912/ja.v21i3.243.
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This study aims to investigate the impact of Indonesian SFAS No. 50 and 55 (revised 2006) on the stock market’s ability to predict firms’ future earnings, which we refer to as stock price informativeness. Our proxy for the stock price informativeness is the forward earnings response coefficient, FERC. This study also investigated whether there is an increase in value-relevance of derivative financial instruments after the implementation of SFAS No. 50 and 55 (revised 2006) in Indonesia. This study found that: (1) the implementation of SFAS No. 50 and 55 (revised 2006) in financial firms which use derivative financial instruments, can increase the ERC but not increase the FERC, and; (2) After the implementation of SFAS No. 50 and 55 (revised 2006), the fair value of derivative financial instruments has significantly positive impact to the market value of equity. These findings suggest that the implementation of Indonesia SFAS No. 50 and 55 (revised 2006) has increased the transparency of derivative financial instrument.
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DRUZHILOVSKAYA, Tat'yana Yu, and Nikolai A. DOBROLYUBOV. "A methodology of accounting for derivative instruments: Challenges and solutions." International Accounting 25, no. 5 (May 16, 2022): 486–506. http://dx.doi.org/10.24891/ia.25.5.486.
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Subject. This article discusses the problems associated with the methodology of accounting for derivative financial instruments of non-financial organizations. Objectives. The article aims to develop recommendations for solving these problems. Methods. For the study, we used a critical analysis, synthesis, comparison, observation, and the analog approach. Results. The article shows the insufficiency of regulation of accounting for derivative financial instruments of Russian non-financial organizations, and it reveals significant differences in the interpretation of the economic essence of derivative financial instruments and the recommended methodological approaches to their valuation and accounting in the scientific literature. The article offers author-developed recommendations for solving problematic issues of accounting for derivative financial instruments of Russian non-financial organizations. Conclusions and Relevance. The current Russian accounting standards for non-financial organizations do not contain regulations on the accounting for derivative financial instruments. It is necessary to develop appropriate regulatory documents. The interpretation of the economic essence of derivative financial instruments, methodological approaches to their evaluation and accounting, proposed in the scientific literature, differ significantly. The results obtained have both applied and theoretical applications in the field of financial accounting.
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Landini, Sara. "From Environmental Insurance to Environmental Derivatives?" European Energy and Environmental Law Review 22, Issue 6 (December 1, 2013): 228–34. http://dx.doi.org/10.54648/eelr2013017.
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Economists propose to use certain financial instruments (like put options and call options) in order to solve two key issues of Environmental Security: funding and prevention. In particular they propose to substitute traditional environmental security instruments (like liability and insurance) for derivative contracts. Although both insurance and derivatives are financial instruments since they allocate financial resources, they are substantially different and need to be distinguished. In this article, I will illustrate the two instruments and discuss differences. Insurance can't be substituted for derivatives, but need to be reconsidered and innovated, particularly in the case of coverage of catastrophic events through the intervention of public reinsurers or of Citizens Insurance Corporation acting as insurance of last resort. Moreover it is possible to design an interplay between insurance and derivative contracts in order to achieve the two basic goals of environmental security: funding and prevention.
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Mehta, Bhumi. "Analysing the Sway of Cash Instruments in the Indian Financial Market Context." International Journal of Management and Development Studies 10, no. 06 (June 30, 2021): 01–04. http://dx.doi.org/10.53983/ijmds.v10i06.371.
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There are basically four types of financial instruments viz. a bank deposit, a bill of exchange, a bond, and equity. As a result of a steady stream of financial innovations in today’s time, the market landscape is far less sparse-and far more complex to evaluate. Financial instruments are termed as the financial products which are tradable as packages of capital, each having their own unique characteristics and structure. The wide collection of financial instruments in today's marketplace allows for the efficient flow of capital amongst the world's investors. Financial instruments are legal documents that embody monetary value. There are a number of different types of documents that are properly identified as a financial instrument. There are different types of financial instrument, like cash instruments or derivative instruments.
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Ahmed, Anwer S., Emre Kilic, and Gerald J. Lobo. "Does Recognition versus Disclosure Matter? Evidence from Value-Relevance of Banks' Recognized and Disclosed Derivative Financial Instruments." Accounting Review 81, no. 3 (May 1, 2006): 567–88. http://dx.doi.org/10.2308/accr.2006.81.3.567.
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We provide evidence on how investor valuation of derivative financial instruments differs depending upon whether the fair value of these instruments is recognized or disclosed. Expanded disclosures and accounting practices prior to SFAS No. 133 and mandatory recognition of derivative fair values after SFAS No. 133 provide a natural setting for comparing the valuation implications of recognized and disclosed derivative fair value information. This unique setting mitigates many of the research design problems with recognition versus disclosure studies. Using a sample of banks that simultaneously hold recognized and disclosed derivatives prior to SFAS No. 133, we find that the valuation coefficients on recognized derivatives are significant, whereas the valuation coefficients on disclosed derivatives are not significant. Further, using a sample of banks that have only disclosed derivatives prior to SFAS No. 133, which are recognized after SFAS No.133, we find that while the valuation coefficients on disclosed derivatives are not significant, the valuation coefficients on recognized derivatives are significant. These results are consistent with the view that recognition and disclosure are not substitutes. Our findings suggest that SFAS No. 133 has increased the transparency of derivative financial instruments.
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Boltanova, Elena S. "Derivative Financial Instruments: Development of Russian Legislation." Vestnik Tomskogo gosudarstvennogo universiteta, no. 444 (June 2019): 217–21. http://dx.doi.org/10.17223/15617793/444/28.
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Xamidov, Ixtiyor. "DEVELOPMENT OF DERIVATIVE TRADE IN THE SECURITIES MARKET OF UZBEKISTAN." INNOVATIONS IN ECONOMY 9, no. 3 (September 30, 2020): 81–86. http://dx.doi.org/10.26739/2181-9491-2020-9-11.
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Revealing the role and poistion in financial globalisation and to further improve the economy of derivative trade system in valued paper markets in the country. Based on the world stock exchange information and the valued paper market derivative trade indexes, the paper is devoted to demonstrate the efficacy of derivatives and providing financial system stability by arranging the financial instruments
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Liu, Yi Chao. "Measurement of Financial Derivative Instrument’s Fair Value." Advanced Materials Research 403-408 (November 2011): 1409–11. http://dx.doi.org/10.4028/www.scientific.net/amr.403-408.1409.
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More and more people pay attention to the measurement standard of derivative financial instruments. As the derivative financial instruments measurement standard, the fair value has been included in the new enterprise accountant criterion in China. How to determine the faire value? This paper introduces the method and its use of the fair value.
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Nuzul, Hafis, and Maya Febrianty Lautania. "PENGARUH LEVERAGE,FINANCIAL DISTRESS DAN GROWTH OPTIONS TERHADAP AKTIVITAS HEDGING PADA PERUSAHAAN NON-KEUANGAN YANG TERDAFTAR DI BURSA EFEK INDONESIA." Jurnal Dinamika Akuntansi dan Bisnis 2, no. 2 (June 21, 2016): 104–13. http://dx.doi.org/10.24815/jdab.v2i2.4211.
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AbstractThis research aims to examine the influence of leverage, financial distress, and growth options on probability of the corporations to execute hedging activities using derivative instruments.The population of this research consist of non financial companies which are listed on IDX (Indonesia Stock Exchange) from 2012-2014.The samples of 210 companies were selected using slovin formula and simple random sampling technique. Hypothesis were tested utilizing logistic regression analysis.The results of this research show that leverage, financial distress, and growth options simultaneously influence the hedging activities by using derivative instruments. Partially leverage influence the hedging activities by using derivative instruments mean while financial distress and growth options do not influence hedging activities by using derivative instruments. Keywords: derivative instruments, financial distress, growth option, Hedging, leverage
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Singla, Akheil, and Martin J. Luby. "Financial Engineering by City Governments: Factors Associated with the Use of Debt-Related Derivatives." Urban Affairs Review 56, no. 3 (September 29, 2018): 857–87. http://dx.doi.org/10.1177/1078087418802360.
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Despite significant coverage in the financial press in recent years, financial engineering by city governments via the use of financial derivatives such as interest rate swaps remain an understudied area of urban financial policy. Indeed, press accounts and other case or conceptual urban studies research emphasizing the downside of these transactions are some of the only sources of information on these instruments. These stories and studies often allude to or speculate on a more basic question: Why would a government choose to enter into a complex financial instrument like a debt-related derivative? This research posits three exploratory hypotheses—financial health, financial experience and/or financial sector influence, and governance structure—culled from media accounts and the urban studies literature on the use of debt-related derivatives by city governments in the United States. It empirically explores these hypotheses by examining the various fiscal, financial, and issuer characteristics of the largest 50 U.S. cities and their choice of whether to use debt-related derivatives. The research finds that the characteristics of government most associated with debt-related derivative use are declining financial condition, increased financial experience and/or financial sector influence, and prior use of interest rate swaps.
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Scholer-Iordanashvili, Lela. "THE ROLE OF DERIVATIVE INSTRUMENTS IN FINANCIAL STABILITY." Globalization and Business 4, no. 8 (December 27, 2019): 130–35. http://dx.doi.org/10.35945/gb.2019.08.017.
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Globalization offers new challenges to the world economy, which becomes more depended on unprecedented in- crease of financial activity worldwide. Availability of information and development of technologies significantly increased capital flow in the world and role of capital and monetary markets in economy. Second half of 2007 and first half of 2008 faced import- ant events in the world economy. Among them especially no- table are US real estate crisis and global limitation of credits, devaluation of USD and strengthening of inflation processes. These global events have significant influence over financial stability. In the recent decade variability of stocks and interest rates, together with globalization of capital markets, in- creased demand on financial instruments with the purpose of distribution of risks. From this perspective, interest rate derivatives are most frequently marketed among OCT derivatives. Therefore, estimation of the role of financial derivatives instruments is very important in stability of international financial system. Purpose of research is to analyze influence of derivatives over financial crisis. Within frameworks of re- search 5 countries are studied for 1997-2010 quarterly. OLS regressive equation is used in research for empirical tests. Model includes following variables: crisis index (dependent variable), independent variables are: correlation rate of cur- rent account and GDP, correlation rate of domestic credit on private sector with GDP, correlation rate between foreign currency reserves and conditional amounts of market derivatives on the stock exchange. Empirical analysis shows us that influence of derivatives over financial stability is not unilateral and depends on characteristics of financial system of the country. Particularly, in Singapore and USA, where financial system is strong, influence of derivatives is positively reflected on financial stability, and empirical study conduct- ed on example of emerging markets, particularly, Argentina, Russia and Brazil revealed negative influence of derivatives on financial system.
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Manjushree, S. "A Derivative is a Risk Hedging Tool from Investor Perspective." Shanlax International Journal of Commerce 8, no. 3 (July 1, 2020): 39–44. http://dx.doi.org/10.34293/commerce.v8i3.3131.
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Derivatives products provide certain important economic benefits such as risk management or redistribution of risk away from risk-averse investors towards those more willing and able to bear the risk. Derivatives also help price discovery, i.e., the process of determining the price level for any asset based on supply and demand. These functions of derivatives help inefficient capital allocation in the economy; at the same time, their misuse also poses a threat to the stability of the financial sector and the overall economy. In the mid-1990s, India started reviving the exchangetraded commodity derivatives market. It introduced a variety of instruments in the foreign exchange derivatives market, while exchange-traded financial derivatives were introduced in 2001. Given India’s experience in informal derivatives trading, the exchange-traded derivatives were quick to pick up substantial volumes. This paper presents the concept of derivative and types of derivative products and how the investor perceives the derivative instrument as a risk-hedging tool in shivamooga city. The study is selected 70 respondents and used percentage analysis. The result obtained from the study reveals that the investor prefers a derivative is a risk-hedging tool.
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Gervasio, Daniele, and Damiano Montani. "Credit Institutes’ Disclosure and Presentation of Derivatives after the Crisis." International Journal of Business and Management 12, no. 2 (January 25, 2017): 123. http://dx.doi.org/10.5539/ijbm.v12n2p123.
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Asked to reconstruct and interpret the causes of the current global crisis, an archaeologist of the fourth millennium could easily find himself sifting through the deluge of publications on the subject of financial instruments known as “derivatives”.The study analyses the disclosure methods adopted for derivative instruments reported in the balance sheets of major banks in central and southern Europe in the period from 2005 to 2012 for the purpose of outlining the types and methods of use in the trading markets amongst retail investors and bank intermediaries.In the light of the analysis conducted, it is possible to observe how the recent financial crisis has not changed the negotiation strategies of the international banking system with regard to derivatives; financial institutions reputed to be amongst the most famous in Europe are, in fact, still intoxicated by these derivative instruments.This paper presents an empirical-analytical approach with a series of keys to understanding the derivative market today in the post-crisis period.
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McAnally, Mary Lea. "Banks, Risk, and FAS105 Disclosures." Journal of Accounting, Auditing & Finance 11, no. 3 (July 1996): 453–90. http://dx.doi.org/10.1177/0148558x9601100313.
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This study examines whether Statement of Financial Accounting Standard No. 105 (FAS105) footnote disclosures of off-balance-sheet financial instruments and derivatives provide risk-relevant information in addition to that provided by the balance sheet alone. A theoretical model relates market and industry risk measures to FAS105 disclosures. Empirical tests of the model reveal that these disclosures do provide risk-relevant numbers although the results are not uniformly strong. The balance sheet financial instruments explain 42 percent of the variation in market risk and 45 percent of the variation in industry-level risk among 499 U.S. commercial bank holding companies. FAS105 disclosures of off-balance-sheet instruments and derivative positions explain an additional 5 to 7 percent of the variation. Stronger evidence is presented that shows that certain controversial classes of derivatives are not associated with increased levels of market and industry-level risk. This latter evidence stands in contrast to the current notion that derivative contracts, especially interest rate and currency swaps, increase overall bank riskiness. Results also corroborate the FASB categorization of classes of financial instruments along two important risk dimensions: credit risk and market risk.
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Song, Wei. "The Risks Control Methods of Financial Derivative Instruments." Advanced Materials Research 171-172 (December 2010): 710–14. http://dx.doi.org/10.4028/www.scientific.net/amr.171-172.710.
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In this article, it quantizes the extended model of risk control system, using different stages, and supervision is the number and type of relative lack of financial products in China, therefore, it is established as a risk management mechanism in China - the financial institutions to eventually. It provides the theory basis for future development, more feasible operation strategy financial derivatives markets, to achieve a reasonable investment and risk control target as -. This article is: it provides the operability of risk control in the macroscopic and microscopic utilization strategy, unswervingly encourage, monitoring and enforcement of financial derivatives.
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Lukova, Olha. "Accounting Identification of Agricultural Receipts as Financial Instruments." Oblik i finansi, no. 4(94) (2021): 30–38. http://dx.doi.org/10.33146/2307-9878-2021-4(94)-30-38.
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Agricultural receipts are a particular financial instrument with industry specifics and are used exclusively by agricultural producers. However, not all types of agricultural receipts are always financial instruments. The purpose of the article is to reveal the accounting nature of the agricultural receipt as a financial instrument to avoid the risks of the accumulation of information in erroneously defined accounting sections. The study results show that approaches to accounting for commodity and financial agricultural receipts should be distinguished. It was proved that regardless of whether an agricultural receipt is issued in exchange for goods or money, it cannot be identified as a financial instrument because it provides for settlement by receiving (supplying) a non-financial asset. At the same time, the financial agricultural receipt meets the criteria of the financial instrument. So it should be reflected in the accounting by the rules set out in the relevant National Accounting Standard. Based on the analysis of subspecies of financial agricultural receipt, it was established that its variable accounting nature is manifested in the fact that depending on the terms of the contract and in exchange for which such an agricultural receipt was issued, it can be recognised in accounting repayable financial assistance (loan), accounts payable for goods (works or services) or derivative financial instruments. Recognition of a financial agricultural receipt as a derivative requires careful consideration of each embedded component and evaluation of the contractual relationship to determine the change (or lack thereof) in the asset's fair value or liability at each reporting date. The identified features of agricultural receipts as accounting objects must be considered in the formation of accounting policies of the enterprise and the implementation of expert verification of accounting records of transactions with such financial instruments.
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Serikov, S. G., and K. E. Chuprakova. "Analysis of the russian market derivative financial instruments." Vestnik Universiteta, no. 8 (September 24, 2019): 169–74. http://dx.doi.org/10.26425/1816-4277-2019-8-169-174.
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Araslanov, Roman Ravilovich. "DERIVATIVE FINANCIAL INSTRUMENTS ON THE RUSSIAN GRAIN MARKET." Economy, labor, management in agriculture, no. 5 (2019): 62–69. http://dx.doi.org/10.33938/195-62.
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Garskaite-Milvydiene, Kristina, and Raimonda Martinkute-Kauliene. "Examination of the Relationship between Derivative Financial Instruments and the Economic Development of Lithuania." Contemporary Economics 15, no. 2 (April 30, 2021): 240–55. http://dx.doi.org/10.5709/ce.1897-9254.446.
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Derivative financial instruments play a major role in financial markets. However, there are rather contradictory views regarding this issue. Their impact on the financial markets, their stability and the economy have not been thoroughly examined. The aim of this paper is to analyse derivatives and the economic situation in the country and to investigate the relationship between the derivatives and the macroeconomic factors which have the greatest impact on the volume of the derivatives. The paper analyses derivatives statistics and macroeconomic indicators in Lithuania. As a result, the relationship between the derivatives and the country’s macroeconomic indicators is examined by identifying the most significant factors, as the structure and volume of derivatives in different markets may be determined by different macroeconomic factors. The performed analysis and estimation have shown that foreign direct investment has the largest impact on the derivatives, their volume and structure, and average earnings have the least impact.
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N. Selvaraj, Dr. "Traders Perception and Awareness on Financial Derivatives in Indian Stock Market." Sumerianz Journal of Economics and Finance, no. 310 (October 21, 2020): 160–70. http://dx.doi.org/10.47752/sjef.310.160.170.
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The Government of India has introduced Economic Policy in 1991 to implement structural reforms for reduce the imbalances. In India, Traders want maximum gain with minimum risk, so is the case with derivatives. Derivatives are among the forefront of the innovations in the financial markets and aim to increase returns and reduce risk. A derivative is a financial product which has been derived from another financial product or commodity. The derivatives do not have independent existence without underlying product and market. Derivatives are contracts which are written between two parties for easily marketable assets. Derivatives are gaining importance due to increased volatility in capital and foreign currency markets. RBI finds ways for healthy development of market and takes steps to popularise the use of derivative instruments, but still awareness about the derivative instruments and its uses are quite low. Hence, it is necessary to find out the level of awareness among investing public and if found low, how to create adequate awareness to encourage the use of derivative products as hedge tools. This study can be used by the regulating authorities and broker houses to increase awareness among the traders about derivatives. One should invest in secured and risk-free investments rather than high-risk, highly profitable investments. Tracking the market environment better with sound knowledge about a particular stock would result in better returns. Since many of the entities in this study are independent of each other, there is need to analyse on a buying decision specifically for respective stocks. People with less experience can also be high profit makers when decisions are based on intricate fundamental and technical analyses.
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Selvaraj, N. "Traders Perception and Awareness on Financial Derivatives in Indian Stock Market." International Journal of Business Management and Finance Research 4, no. 1 (December 10, 2021): 19–31. http://dx.doi.org/10.53935/26415313.v4i1.172.
Full textAbstract:
The Government of India has introduced Economic Policy in 1991 to implement structural reforms for reduce the imbalances. In India, Traders want maximum gain with minimum risk, so is the case with derivatives. Derivatives are among the forefront of the innovations in the financial markets and aim to increase returns and reduce risk. A derivative is a financial product which has been derived from another financial product or commodity. The derivatives do not have independent existence without underlying product and market. Derivatives are contracts which are written between two parties for easily marketable assets. Derivatives are gaining importance due to increased volatility in capital and foreign currency markets. RBI finds ways for healthy development of market and takes steps to popularise the use of derivative instruments, but still awareness about the derivative instruments and its uses are quite low. Hence, it is necessary to find out the level of awareness among investing public and if found low, how to create adequate awareness to encourage the use of derivative products as hedge tools. This study can be used by the regulating authorities and broker houses to increase awareness among the traders about derivatives. One should invest in secured and risk-free investments rather than high-risk, highly profitable investments. Tracking the market environment better with sound knowledge about a particular stock would result in better returns. Since many of the entities in this study are independent of each other, there is need to analyse on a buying decision specifically for respective stocks. People with less experience can also be high profit makers when decisions are based on intricate fundamental and technical analyses.
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Rasekhi, Saeed, and Nasim Nabavi. "Do Derivatives Hinder the Financial Contagion? A Case Study of Developed Countries’ Stock Markets." Journal of Business Strategy Finance and Management 2, no. 1 (June 30, 2021): 89–101. http://dx.doi.org/10.12944/jbsfm.02.01.10.
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The main purpose of this study is to test the effect of the derivative instruments on financial contagion in developed countries including France, Germany, South Korea, Spain, the Netherlands and the United Kingdom, considering the United States as the source of the crisis. Therefore, at first, existence of the contagion in the markets was investigated using the ARMA-GARCH-COPULA method, and then, the effect of the derivative instruments on the contagion for the selected countries was examined during the time period 01: 2007: to 08:2018. The results confirm the negative effect of the derivatives on the contagion.
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Rasekhi, Saeed, and Nasim Nabavi. "Do Derivatives Hinder the Financial Contagion? A Case Study of Developed Countries’ Stock Markets." Journal of Business Strategy Finance and Management 2, no. 1-2 (December 25, 2020): 89–101. http://dx.doi.org/10.12944/jbsfm.02.01-02.10.
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The main purpose of this study is to test the effect of the derivative instruments on financial contagion in developed countries including France, Germany, South Korea, Spain, the Netherlands and the United Kingdom, considering the United States as the source of the crisis. Therefore, at first, existence of the contagion in the markets was investigated using the ARMA-GARCH-COPULA method, and then, the effect of the derivative instruments on the contagion for the selected countries was examined during the time period 01: 2007: to 08:2018. The results confirm the negative effect of the derivatives on the contagion.
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Kusumastuti, Dani. "Instrumen Derivatif dan Mekanisme Hedging dalam Perspektif Syariah Islam." Al-Manahij: Jurnal Kajian Hukum Islam 2, no. 2 (December 12, 2008): 227–46. http://dx.doi.org/10.24090/mnh.v2i2.3692.
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The application of derivative instruments have been broadly expanded. As a hedging instrument, it is now becomes so far as an investment instrument that traded in the market in massive volume. Major of Islamic scholars have found them to be objectionable based on the juridical nature of contractual arrangements. This paper explains the expanding function of contemporary derivatives and reviews the scholars legal point of view. This paper also defines the basic norms of Islamic financial ethics as the guidance for developing Islamic financial instrument. In the last section of this paper examines alternative for Islamic hedging based on salam and al-khiyar principles, which completed by syariah insurance.
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Lopo Martinez, Antonio, José Enrique Teixeira Reinoso, Rafael Moreira Antonio, and Rogiene Santos. "Financial Derivatives, Hedge Accounting and Tax Aggressiveness in Brazil." Contabilidad y Negocios 15, no. 29 (August 17, 2020): 19–39. http://dx.doi.org/10.18800/contabilidad.202001.002.
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This study investigated the relationship between the use of financial derivatives by non-financial corporations and tax aggressiveness in Brazil. In research on the American market, evidence was identified that non-financial entity users of financial derivatives were more tax aggressive. However, there is no reason to assume that this behavior is replicated in the Brazilian market, since tax legislation does not offer the same economic incentives, i.e., since it imposes limits on the tax deductibility of losses with these financial instruments, except in derivatives’ well-documented and proven use as a hedge tool. To verify this point, companies were classified into users and non-users of first-generation financial derivatives, and associated this classification with tax aggression metrics. The study focus was 384 non-financial companies listed on the B3 in the period from 2005 to 2015. The results of regression analysis using a probit estimate have pointed, in a distinctly different way than the American reality, that the most tax aggressive companies tend to use fewer financial derivatives. Nevertheless, when the use of derivative instruments as a hedge was controlled, it was found that when a company adopts hedge accounting, it is more likely it will be more tax aggressive. The result is presumably explained by the Brazilian tax treatment that authorizes the deductibility of losses, regardless of earnings, when using the derivative as a hedge.
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Zheng, Jiaying. "A Brief Analysis of Derivative Financial Instrument Accounting and China's Countermeasures." Finance and Market 4, no. 2 (November 23, 2019): 59. http://dx.doi.org/10.18686/fm.v4i2.1602.
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<p>In recent years, with the rapid development of China's economy, derivative financial instruments are more widely used in China's enterprises. This paper studies the accounting for derivative financial instruments, which brings great challenges and risks to the development of many enterprises because of its high stakes and high returns. Therefore, to deal with the challenges, China should reformulate accounting confirmation standards, adopt a variety of value measurement, improve accounting statements, strengthen the accounting supervision of derivative instruments risks and other scientific and effective coping strategies.</p><br /><!--EndFragment-->
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Guseva, I. A. "Transformation of the purposesof using derivative financial instrumentsin the modern economy." Siberian Financial School, no. 3 (September 10, 2021): 83–87. http://dx.doi.org/10.34020/1993-4386-2021-3-83-87.
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Derivative financial instruments originated several centuries ago, but the explosive growth of their use begins with the last third of the twentieth century. Increased uncertainty, unpredictability of commodity prices, exchange rates, interest rates as the price of capital has led to the need to protect against financial risks. But as the financial economy develops, derivative financial instruments are used not only by financial institutions for the purpose of speculation and hedging, but also by financial engineers to carry out specific strategies, to solve complex business problems.
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Gruzdev, Oles S. "DERIVATIVE FINANCIAL INSTRUMENTS IN TERMS OF BOOK-ENTRY SECURITIES." Vestnik Tomskogo gosudarstvennogo universiteta, no. 420 (July 1, 2017): 154–59. http://dx.doi.org/10.17223/15617793/420/23.
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Eid, Ali Haitham. "Development of exchange and over-the-counter derivatives of financial instruments in Russia." Vestnik Universiteta, no. 12 (February 3, 2022): 151–56. http://dx.doi.org/10.26425/1816-4277-2021-12-151-156.
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Since there is an active trend of increasing derivative instruments in the Russian derivatives market, the object of this study was exchange-traded and over-the-counter derivatives in Russia, and the purpose of the study – the development of their application. To achieve this goal, such scientific research methods as analysis, comparison, description and historical method are used. The most important conclusions of the study are that the derivatives market has developed rapidly since 2013, but in 2021 it witnessed a significant increase due to the appeal of a large number of investors to invest in financial markets, and due to increased concern about the volatility of the exchange rate, due to which many dealers dealing in derivatives buy these instruments sometimes for the purpose of hedging, and at other times for the purpose of speculation or both.
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Lee, Su Jeong, Young Jun Kim, Eugenia Y. Lee, and Ga-young Choi. "Market Reactions to Announcements of Valuation Losses on Conversion Rights Embedded in Convertible Instruments." Journal of Derivatives and Quantitative Studies 28, no. 1 (February 29, 2020): 35–61. http://dx.doi.org/10.37270/jdqs.28.1.2.
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Convertible instruments are financial instruments embedded with conversion rights such as convertible bonds or convertible preferred stocks. Under the Korean International Financial Reporting Standards (K-IFRS), the embedded conversion rights with certain conditions (i.e., a refixing clause) are recognized as derivative liabilities and are recognized at fair value in issuer’s financial statements. Since the value of convertible rights varies with the underlying stock value, an increase in the issuers’ stock price causes the issuers of convertible instruments to announce large derivative valuation losses. Using disclosures under the title of ‘Loss from Derivatives Trading’ from the KOREA EXCHANGE (KRX) during January 2016 through December 2019, this study examines market reactions to the disclosure of valuation losses on conversion rights embedded in convertible instruments. We find the following results. First, abnormal stock returns on the loss announcement date are significantly negative. Second, abnormal trading volumes peak on the loss announcement date. Third, abnormal stock returns persist in the long-term. Collectively, our findings suggest that investors perceive the loss disclosures as negative news, but fail to impound the information into issuer’s stock prices effectively. This study emphasizes the importance of education on convertible instruments and improvement in the disclosure requirements on valuation losses of conversion rights embedded in convertible instruments by providing evidence that investors face difficulty in understanding the related disclosures.
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GUZIKOVA, Lyudmila A., and Natal’ya A. KIM. "Derivatives: Classification and Regulatory Issues." Finance and Credit 27, no. 8 (August 30, 2021): 1813–27. http://dx.doi.org/10.24891/fc.27.8.1813.
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Subject. We investigate problems of development and regulation of derivative financial instruments (DFI) in Russia. Objectives. The purpose is to consider trends in the regulation of derivatives. Methods. The study draws on general scientific methods. Results. Based on the analysis of best practices, we confirm the need to regulate derivative financial instruments and identify major requirements for the regulation. The paper describes the history and current state of DFI regulation in Russia, analyzes the opinions of researchers and experts regarding the government intervention in the DFI market functioning. Approaches to regulation are linked to the goals and objectives of market participants and macroeconomic functions of the market. The paper also shows mechanisms by which derivatives affect the level of systemic risk in the economy and proves the importance of organizational and economic transformations in the field of DFI. Conclusions. The paper states priority tasks and practical steps in the regulation of DFI in Russia.
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Novak, Oksana, Oleksandr Melnychenko, and Oksana Oliinyk. "Improving the regulation of the derivatives market as an objective prerequisite for sustainable development of the global financial system." E3S Web of Conferences 307 (2021): 02002. http://dx.doi.org/10.1051/e3sconf/202130702002.
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The development of financial markets is characterized by the emergence of new financial instruments, in particular derivatives, the risk level analysis of which is complicated. Counterparties are not always fully aware of and do not adequately assess the potential risks of derivatives, which may lead to large financial losses and sometimes bankruptcies. The purpose of the study is to generalize approaches to regulating derivative markets and analyse the adequacy of regulatory influence to ensure sustainable development of the global financial system. The article analyses the approaches of scientists and regulators of the USA and the EU to the regulation of the derivatives market before and after the financial crisis of 2007-2008. Prior to the crisis, most scholars took a liberal approach to derivatives market regulation and recommended monitoring new instruments and not restricting their circulation in any way, emphasizing that effective counterparty risk management and their propensity for self-preservation can prevent excessive risk-taking. The authors analyse the potential risks of derivatives and conclude that exchange-traded derivatives can cause similar processes of liquidity crisis, and, therefore, need additional regulatory tools to ensure the stability of the financial system
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YURCHENKO, V. E. "HEDGING FINANCIAL RISKS OF DOMESTIC INDUSTRIAL COMPANIES ON NATIONAL EXCHANGES." EKONOMIKA I UPRAVLENIE: PROBLEMY, RESHENIYA 1, no. 3 (2021): 114–19. http://dx.doi.org/10.36871/ek.up.p.r.2021.03.01.016.
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The article discusses the financial risks of industrial companies, which can be managed using derivative financial instruments. Their separation from other risk factors inherent in the economic activity of non-financial organizations has been substantiated. Approaches for assessing stock exchanges and their tools are proposed in the context of constructing the most cost-effective hedging strategies for the above risks. Criteria were formulated and substantiated to be met by the indicated exchanges and circulating derivatives for their more active use by the management of non-financial companies.
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Keffala, Mohamed Rochdi. "Are Derivatives Implicated in the Recent Financial Crisis? Evidence from Banks in Emerging Countries." Review of Pacific Basin Financial Markets and Policies 20, no. 01 (March 2017): 1750004. http://dx.doi.org/10.1142/s0219091517500047.
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This work aims to inspect the common debate about the implication of derivative instruments in amplifying the last financial crisis. To reach this goal, the study chooses a sample of banks entirely from emerging countries — over the whole period 2003–2011 — in which we examine the impact of derivatives simultaneously on performance, risk and stability during the ordinary period “the pre-crisis period”, 2003–2006, and the unstable period “the crisis and post crisis period”, 2007–2011. The regressions are estimated by generalized methods of moments (GMM) as developed by Blundell and Bond (1998). The major conclusion reveals that only swaps can be considered as implicated in the intensification of the last financial crisis. Therefore, the rest of derivatives instruments cannot be responsible in the amplification of the recent financial crisis. Indeed, the widespread idea accusing all derivatives to be in part responsible of the intensification of the last financial crisis should be revised.
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Milovidov, V. "Liberalism and Regulation of Financial Market." World Economy and International Relations, no. 9 (2012): 20–30. http://dx.doi.org/10.20542/0131-2227-2012-9-20-30.
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Reagan's financial sector deregulation became a starting point for the financial engineering, derivatives, combinatory financial operations industry. Due to it hedge funds developed, and a range of risk financial transactions expanded among the banks that found both new forms of financial risk hedging and new sources of income: arbitrage and hedging, credit default swaps, operations with "second-rate” credits. It was them that exploded the market in 2007–2008. The reaction of states realized in a string of regulation initiatives, including creation of supranational coordination bodies (in particular, Financial Stability Board); reformatting of mega regulators and on their base – the shaping of state prudential supervision and financial services consumer rights protection bodies with different tasks; restrictions on hedge funds activities; toughening of derivative instruments regulation and implementing of a central counterparty institute on derivatives market.