Premium
Interest Rate Risk Management in Major Finnish Firms[Note 1. We would like to thank Risto Veijola and Thomas ...]
Author(s) -
Hakkarainen Antti,
Kasanen Eero,
Puttonen Vesa
Publication year - 1997
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/1468-036x.00043
Subject(s) - interest rate risk , interest rate , interest rate swap , leverage (statistics) , risk management , debt , business , economics , interest rate derivative , actuarial science , financial risk management , financial economics , monetary economics , finance , machine learning , computer science
The interest rate policies of Finnish firms appear risk aversive, but hedging decisions are influenced by market view. Managers find they can forecast trends in interest rate development, and employ the forecasts in the choice of debt and hedging instruments. The use of risk assessment methods and hedging instruments are related to firm size but not to leverage. Most frequently employed hedging instruments are interest rate swaps and forward rate agreements. The respondents find their firms' interest rate risk management is successful, but performance is seldom measured against an explicitly defined benchmark.