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| Volume 11, No. 1,
June
2012 |
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The Use of Derivatives as a
Risk Management Instrument: |
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Evidence from Indonesian
Non-Financial Firms |
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I Wayan Nuka Lantara |
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Faculty of Economics and
Business, Universitas Gadjah Mada, Indonesia |
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| Abstract |
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This paper provides empirical evidence
of firm-specific factors determining the decision to use derivatives
and the level of usage for the case of Indonesia. The findings show
that the participation rate in the use of derivatives is 15.8%, much
lower compared to those found in developed countries. Using Probit
and Tobit regression models, the results indicate that the use of
derivatives is positively associated with firm size, market-to-book
value, bank-firm relationship, and the involvement of the firm in
foreign business activity, but negatively linked to liquidity. |
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Key words:
derivatives; risk management; hedging |
| JEL
classification: G32 |
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