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The Use of Financial Derivatives in Emerging Market Economies: An Empirical Evidence from Bosnia and Herzegovina's Non-Financial Firms


  • Emira Kozarevic
  • Meldina Kokorovic Jukan
  • Beriz Civic


This paper discusses development of financial derivatives markets in emerging market economies, focusing on the use of financial derivatives in risk management purposes of non-financial firms in Bosnia and Herzegovina. For achieving the research goals authors collected data on the derivatives market structure and types of derivative instrument traded, focusing commercial banks, because of the authors¡¯ prior knowledge of the derivatives market. Additionally, in order to assess the current state and development perspectives of derivatives usage by the non-financial firms, authors conducted a research on the random sample of non-financial firms, using data from the Foreign Trade Chamber of Bosnia and Herzegovina as well as the information from lists of derivatives users-clients provided by some banks of Bosnia and Herzegovina. The research shows that derivatives market in the country exists as an over-the-counter market, where banks play dominant role and offer different types of derivative instruments. Three types of derivatives are being offered: currency forwards, currency swaps, and interest rate forwards. The main reason for the poor offer is low demand, lack of non-financial firms¡¯ knowledge about benefits of derivatives, and low number of business operations on the global markets by the non-financial firms.

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  • Emira Kozarevic & Meldina Kokorovic Jukan & Beriz Civic, 2014. "The Use of Financial Derivatives in Emerging Market Economies: An Empirical Evidence from Bosnia and Herzegovina's Non-Financial Firms," Research in World Economy, Research in World Economy, Sciedu Press, vol. 5(1), pages 39-48, March.
  • Handle: RePEc:jfr:rwe111:v:5:y:2014:i:1:p:39-48

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    References listed on IDEAS

    1. Gordon M. Bodnar & Abe de Jong & Victor Macrae, 2003. "The Impact of Institutional Differences on Derivatives Usage: a Comparative Study of US and Dutch Firms," European Financial Management, European Financial Management Association, vol. 9(3), pages 271-297.
    2. Söhnke M. Bartram & Gregory W. Brown & Frank R. Fehle, 2009. "International Evidence on Financial Derivatives Usage," Financial Management, Financial Management Association International, vol. 38(1), pages 185-206, March.
    3. Walter Dolde, 1993. "The Trajectory Of Corporate Financial Risk Management," Journal of Applied Corporate Finance, Morgan Stanley, vol. 6(3), pages 33-41.
    4. Gordon M. Bodnar & Gregory S. Hayt & Richard C. Marston, 1998. "1998 Wharton Survey of Financial Risk Management by US Non-Financial Firms," Financial Management, Financial Management Association, vol. 27(4), Winter.
    5. Pramborg, Bengt, 2005. "Foreign exchange risk management by Swedish and Korean nonfinancial firms: A comparative survey," Pacific-Basin Finance Journal, Elsevier, vol. 13(3), pages 343-366, June.
    6. Martin, Miguel Ángel, 2009. "Derivatives Usage By Non-Financial Firms In Emerging Markets: The Peruvian Case," Journal of Economics, Finance and Administrative Science, Universidad ESAN, vol. 14(27), pages 73-86.
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