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The Determinants Of The Use Of Derivatives In Japanese Insurance Companies

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  • Atsushi Takao

    (Graduate School of Business Administration, Kobe University)

  • I Wayan Nuka Lantara

    (Graduate School of Business Administration, Kobe University)

Abstract

The purpose of this study are to investigate the patterns of the use of derivatives by Japanese insurance companies, and to examine which firms-specific factors determine the decision of Japanese insurance companies to use derivatives. Using a sample of Japanese life insurance and non life insurance companies during the period of 2001-2008, we find that the participation rate for the use of derivatives by insurance companies in Japan is 72.4%, much higher than those found in the US, the UK or Australia. Using probit regression models, we examine the determinants of the use of derivatives, and we find that the decision to use derivatives by insurance companies is positively associated with firm size, leverage, and proportion of asset invested in stock, but negatively related with asset liability mismatch. We also find that the decision of Japanese insurance companies to extend their markets to operate globally increase the need to use derivatives.

Suggested Citation

  • Atsushi Takao & I Wayan Nuka Lantara, 2009. "The Determinants Of The Use Of Derivatives In Japanese Insurance Companies," Discussion Papers 2009-38, Kobe University, Graduate School of Business Administration.
    • Handle: RePEc:kbb:dpaper:2009-38
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    File URL: https://www.b.kobe-u.ac.jp/papers_files/2009_38.pdf
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    References listed on IDEAS

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    Cited by:

    1. I Wayan Nuka Lantara, 2012. "The Use of Derivatives as a Risk Management Instrument: Evidence from Indonesian Non-Financial Firms," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 11(1), pages 45-62, June.

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