Foreign exchange risk management practices-a study in Indian scenario

Indian economy in the post-liberalization era has witnessed increasing awareness of the need for introduction of various risk management products to enable hedging against market risk in a cost effective way. This industry-wide, cross-sectional study concentrates on recent foreign exchange risk mana...

Full description

Bibliographic Details
Main Author:	Debasish, Sathya Swaroop
Format:	Article
Language:	English
Published:	BRAC University 2010
Subjects:	Foreign exchange Financial derivatives Hedging Risk
Online Access:	http://hdl.handle.net/10361/447

id	10361-447
record_format	dspace
spelling	10361-4472019-09-29T05:47:44Z Foreign exchange risk management practices-a study in Indian scenario Debasish, Sathya Swaroop Foreign exchange Financial derivatives Hedging Risk Indian economy in the post-liberalization era has witnessed increasing awareness of the need for introduction of various risk management products to enable hedging against market risk in a cost effective way. This industry-wide, cross-sectional study concentrates on recent foreign exchange risk management practices and derivatives product usage by large non-banking Indian-based firms. The study is exploratory in nature and aims at an understanding the risk appetite and FERM (Foreign Exchange Risk Management) practices of Indian corporate enterprises. This study focuses on the activity of end-users of financial derivatives and is confined to 501 non-banking corporate enterprises. A combination of simple random and judgment sampling was used for selecting the corporate enterprises and the major statistical tools used were Correlation and Factor analysis. The study finds wide usage of derivative products for risk management and the prime reason of hedging is reduction in volatility of cash flows. VAR (Value-at-Risk) technique was found to be the preferred method of risk evaluation by maximum number of Indian corporate. Further, in terms of the external techniques for risk hedging, the preference is mostly in favor of forward contracts, followed by swaps and cross-currency options This article throws light on various concerns of Indian firms regarding derivative usage and reasons for non-usage, apart form techniques of risk hedging, risk evaluation methods adopted, risk management policy and types of derivatives used. 2010-10-11T05:02:00Z 2010-10-11T05:02:00Z 2008 Article http://hdl.handle.net/10361/447 en BRAC University Journal, BRAC University;Vol.5, No.2,pp. 81-91 application/pdf BRAC University
institution	Brac University
collection	Institutional Repository
language	English
topic	Foreign exchange Financial derivatives Hedging Risk
spellingShingle	Foreign exchange Financial derivatives Hedging Risk Debasish, Sathya Swaroop Foreign exchange risk management practices-a study in Indian scenario
description	Indian economy in the post-liberalization era has witnessed increasing awareness of the need for introduction of various risk management products to enable hedging against market risk in a cost effective way. This industry-wide, cross-sectional study concentrates on recent foreign exchange risk management practices and derivatives product usage by large non-banking Indian-based firms. The study is exploratory in nature and aims at an understanding the risk appetite and FERM (Foreign Exchange Risk Management) practices of Indian corporate enterprises. This study focuses on the activity of end-users of financial derivatives and is confined to 501 non-banking corporate enterprises. A combination of simple random and judgment sampling was used for selecting the corporate enterprises and the major statistical tools used were Correlation and Factor analysis. The study finds wide usage of derivative products for risk management and the prime reason of hedging is reduction in volatility of cash flows. VAR (Value-at-Risk) technique was found to be the preferred method of risk evaluation by maximum number of Indian corporate. Further, in terms of the external techniques for risk hedging, the preference is mostly in favor of forward contracts, followed by swaps and cross-currency options This article throws light on various concerns of Indian firms regarding derivative usage and reasons for non-usage, apart form techniques of risk hedging, risk evaluation methods adopted, risk management policy and types of derivatives used.
format	Article
author	Debasish, Sathya Swaroop
author_facet	Debasish, Sathya Swaroop
author_sort	Debasish, Sathya Swaroop
title	Foreign exchange risk management practices-a study in Indian scenario
title_short	Foreign exchange risk management practices-a study in Indian scenario
title_full	Foreign exchange risk management practices-a study in Indian scenario
title_fullStr	Foreign exchange risk management practices-a study in Indian scenario
title_full_unstemmed	Foreign exchange risk management practices-a study in Indian scenario
title_sort	foreign exchange risk management practices-a study in indian scenario
publisher	BRAC University
publishDate	2010
url	http://hdl.handle.net/10361/447
work_keys_str_mv	AT debasishsathyaswaroop foreignexchangeriskmanagementpracticesastudyinindianscenario
_version_	1814309086379900928

Foreign exchange risk management practices-a study in Indian scenario

Similar Items