Int. J. of Accounting and Finance   »   2016 Vol.6, No.3

 

 

Title: The effectiveness of financial-hedging techniques: a Gulf Cooperation Council perspective

 

Authors: Ahmad Bash; Abdullah M. Al-Awadhi; Musaed Al-Ali

 

Addresses:
Department of Insurance and Banking, College of Business Studies, Public Authority for Applied Education and Training (PAAET), Ardiya Block 4, Building T6, Street 602, Kuwait
School of Economics, Finance and Marketing, RMIT University, Building 80, 445 Swanston Street, Melbourne VIC 3000, Australia
Department of Insurance and Banking, College of Business Studies, Public Authority for Applied Education and Training (PAAET), Ardiya Block 4, Building T6, Street 602, Kuwait

 

Abstract: The paper examines the effectiveness of financial-hedging techniques - forward hedging, money-market hedging and cross-currency hedging, for a domestic firm in the Gulf Cooperation Council with foreign-currency exposure to GBP, CHF and JPY. The results show that there is no difference between using forward hedging or money-market hedging, owing to the high correlation between spot and forward rates. However, in relation to cross-currency hedging, the results are mixed: the effectiveness of cross-currency hedging depends on exchange-rate correlation.

 

Keywords: financial hedging; foreign exchange rates; exchange rate risk; Gulf Cooperation Council; GCC countries; fixed exchange rates; cross-currency hedging; forward hedging; money-market hedging.

 

DOI: 10.1504/IJAF.2016.081702

 

Int. J. of Accounting and Finance, 2016 Vol.6, No.3, pp.219 - 234

 

Submission date: 07 May 2016
Date of acceptance: 29 Aug 2016
Available online: 18 Jan 2017

 

 

Editors Full text accessAccess for SubscribersPurchase this articleComment on this article