Italian nonfinancial firms and derivatives
This paper studies the characteristics of the Italian nonfinancial firms using derivatives and the purpose of the derivatives use according to the most important literature in financial risk management. By using the Italian credit register and balance sheet data this study extends for the first time the derivatives analysis to small and medium firms. The paper finds that derivatives are used frequently among nonfinancial firms. Firms using derivatives are the most exposed to financial risks and have different economic and financial characteristics with respect to non-using ones. By examining some financial risk indicators the analysis finds a relation between high derivative exposure and financial distress. In the use of derivatives bank-firm relationship is more concentrated than in the loan relationship.
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