IJSSE - International Journal of Social Sciences and Entrepreneurship Upcoming Journals: International Journal of Innovation and Management (IJIM), International Journal of Engineering and Architecture (IJEA) & International Journal of Science and Agriculture | IJAE, IJEF & IJHRP Call for Papers - Forthcoming Issue (Decemer 2014). Submission deadline: 25th December 2014 |

No images

UserInfo


18.97.14.90
United States United States
Your Time

User Statistics Info
IJSSE is one of the leading International Journals by User Statistics!

Login Form



IJSSE Newsletter Form
Full Names *
E-mail Address: *
Country *
PDF Print E-mail

CHALLENGES FACING NON-FINANCIAL FIRMS IN HEDGING FINANCIAL RISKS USING DERIVATIVES


Christopher Mutembei Murungi

Kenya Methodist University, Kenya

Prof. Kinandu Murage

Executive Director, Kenya School of Monetary Studies, Kenya

Dr. Kenneth Wanjau

Jomo Kenyatta University of Agriculture and Technology, Kenya


ABSTRACT

With the advancement in technology and accompanying information age and globalization, firms are increasingly exposed to financial risks, posing a threat to their financial performance even leading ultimate collapse. Nonetheless, innovation has led to innovative ways of hedging against financial risks through derivatives. However, financial risk hedging and derivative use in Kenya has remained low in Kenya coupled with lack of studies and dearth of knowledge on the possible reasons for limited use of derivatives, this study is warranted. The study looks at financial risk exposures facing financial firms, their hedging practices and challenges facing derivative use. The descriptive study was conducted on the 39 nonfinancial firms listed at the NSE. The firms’ heads of finance or risk management department were the targeted respondents to whom semi structured questionnaires were sent. The study used descriptive statistics such as frequency, percentages, mean and standard deviations to analyze and summarize the results. The findings and concluded that nonfinancial firms do not use derivatives owing to managerial skepticism, limited derivative market microstructure, and knowledge on derivative use and accounting. The study recommends that education programs on derivative and their use should be rolled to firm’s managers and firms to develop hedging policies that act as blueprint in hedging financial risks.


Full Text PDF Format

 
Banner
Publication Disclaimer: The accountability of the article published in IJSSE journals is entirely of the author(s) concerned and not of the publisher/editor. The view expressed in the articles of any IJSSE journal is those of the contributors, and it does not essentially correspond to the views of the publisher/editor. It is responsibility of the authors to seek copyright clearance for any part of the content of the articles. The publisher/editor of IJSSE journals is not liable for errors or any consequences arising from the exercise of information contained in it.
Free counters!
IJSSE - International Journal of Social Sciences and Entrepreneurship | Copyright 2013 | All Rights Reserved  <