The Impact of the Use of Financial Derivatives on Chinese Listed Banks (Published)
With the deepening of global integration, the innovation and use of financial derivatives have received more and more attention, and China’s financial derivatives market has developed rapidly. Based on the research on the main users of financial derivatives, commercial banks, using the data of 16 listed commercial banks in China from 2012 to 2017, this paper finds that the fair value of financial derivatives of commercial banks is negatively correlated with the risk level. The use of financial derivatives reduces their level of risk. In terms of performance improvement, banks’ use of financial derivatives has a positive effect on improving performance. However, due to the lack of maturity of the market and products, this positive effect is not significant.
Keywords: Financial Derivative, Listed bank, Risk hedging, performance improvement