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Bank-firm relationship and the use of derivatives in japan

Author

Listed:
  • Tadanori Yosano

    (Graduate School of Business Administration, Kobe University)

  • I Wayan Nuka Lantara

    (Faculty of Economics and Business, Universitas Gadjah Mada, Indonesia, and Graduate School of Business Administration)

Abstract

In this paper, we examine the association between bank-firm relationship and the use of derivatives, in term of decision to use or not to use derivatives as well as the extent of derivatives usage. We employ samples of non-financial companies listed in NIKKEI 225 index from 2005-2009. Using probit regression test, we find that bank-firm relationship and firm' s size positively induce the decision to use derivatives. Meanwhile, using tobit regression test, the result indicate that bank-firm relationship, firm' s size, leverage and dividend yield positively influence the magnitude of derivatives usage. The findings of our paper provide an empirical support for the hypothesis of Hakenes (2004) which argues that bank-firm relationship will benefit firm not only as the sources to grant loan, but also as delegated risk manager which could assist the firm in designing the appropriate hedging instrument.

Suggested Citation

  • Tadanori Yosano & I Wayan Nuka Lantara, 2010. "Bank-firm relationship and the use of derivatives in japan," Discussion Papers 2010-58, Kobe University, Graduate School of Business Administration.
    • Handle: RePEc:kbb:dpaper:2010-58
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    File URL: https://www.b.kobe-u.ac.jp/papers_files/2010_58.pdf
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    References listed on IDEAS

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    Cited by:

    1. Paweł Ożga, 2012. "Instrumenty pochodne w spółkach notowanych na Giełdzie Papierów Wartościowych w Warszawie," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 4, pages 127-151.
    2. Mariano Graziano, 2012. "Italian nonfinancial firms and derivatives," Questioni di Economia e Finanza (Occasional Papers) 139, Bank of Italy, Economic Research and International Relations Area.
    3. 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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