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Determinants of the extent of Asia-Pacific banks’ derivative activities

Author

Listed:
  • Hue Hwa Au Yong

    (Department of Accounting and Finance, Monash University, Australia)

  • Robert Faff

    (UQ Business School, University of Queensland, Australia)

  • Keryn Chalmers

    (Department of Accounting and Finance, Monash University, Australia)

Abstract

We present an analysis of the determinants of Asia-Pacific banks’ extent of derivative activities. Our findings suggest that the probability of financial distress and economies of scale arguments are important in this regard. Further analyses reveal that Asia-Pacific dealer banks tend to use more foreign currency derivatives while interest rate derivatives are generally used for hedging purposes. Our findings also indicate that banks located in countries with an explicit deposit insurance scheme engage in greater derivative activities. Such behaviour may reflect either hedging or speculation.

Suggested Citation

  • Hue Hwa Au Yong & Robert Faff & Keryn Chalmers, 2014. "Determinants of the extent of Asia-Pacific banks’ derivative activities," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 13(3), pages 430-448, September.
    • Handle: RePEc:ami:journl:v:13:y:2014:i:3:p:430-448
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    Cited by:

    1. Hassan Tanha & Michael Dempsey & Mena Labeb, 2018. "Derivatives Usage by Australian Industrial Firms: Pre-, during and post-GFC," Review of Economics & Finance, Better Advances Press, Canada, vol. 11, pages 31-39, February.

    More about this item

    Keywords

    Derivatives; Asia-Pacific banks; Determinants;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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