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Article

The Dynamics of Foreign Exchange Derivative Use in China

by
Yidi Sun
and
Bruce Morley
*
Department of Economics, University of Bath, Bath BA2 7AY, UK
*
Author to whom correspondence should be addressed.
J. Risk Financ. Manag. 2021, 14(7), 291; https://doi.org/10.3390/jrfm14070291
Submission received: 19 May 2021 / Revised: 17 June 2021 / Accepted: 21 June 2021 / Published: 25 June 2021
(This article belongs to the Special Issue International Financial Markets)
Versions Notes

Abstract

The aim of this study is to determine the main factors affecting the use of foreign exchange hedging instruments by Chinese firms, following their regulatory changes in the derivative markets. The original contributions to this literature include the use of a panel dataset of 316 Chinese firms with the data running from 2012 to 2017 and a dynamic random effects probability approach. The results suggest the main determinants of derivative use are the overseas trade conducted by these firms, with some evidence of non-linearity, as well as firms being more likely to use derivatives when there is more information asymmetry and agency problems, potentially due to greater controls on their use in China.
Keywords: hedging; derivative; dynamic panel; exports hedging; derivative; dynamic panel; exports

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MDPI and ACS Style

Sun, Y.; Morley, B. The Dynamics of Foreign Exchange Derivative Use in China. J. Risk Financ. Manag. 2021, 14, 291. https://doi.org/10.3390/jrfm14070291

AMA Style

Sun Y, Morley B. The Dynamics of Foreign Exchange Derivative Use in China. Journal of Risk and Financial Management. 2021; 14(7):291. https://doi.org/10.3390/jrfm14070291

Chicago/Turabian Style

Sun, Yidi, and Bruce Morley. 2021. "The Dynamics of Foreign Exchange Derivative Use in China" Journal of Risk and Financial Management 14, no. 7: 291. https://doi.org/10.3390/jrfm14070291

APA Style

Sun, Y., & Morley, B. (2021). The Dynamics of Foreign Exchange Derivative Use in China. Journal of Risk and Financial Management, 14(7), 291. https://doi.org/10.3390/jrfm14070291

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