Title: Determinants of foreign currency hedging in Indian non-financial firms: a Tobit regression approach

Authors: Kritika Mathur; Sarita Singh

Addresses: Dr. B.R. Ambedkar University Delhi, Kashmere Gate Campus, Delhi – 110006, India ' Dr. B.R. Ambedkar University Delhi, Kashmere Gate Campus, Delhi – 110006, India

Abstract: The present study examines the determinants of foreign currency hedging in Indian non-financial firms with the extent of hedging as a dependent variable. Using balanced panel Tobit regression on a sample of 426 Indian non-financial firms for the period 2016-2017 to 2022-2023, the analysis also incorporates a period-by-period examination to capture variations across normal and crisis periods (COVID-19). The results show that scale economies, leverage, international operations, and profitability are significant in determining the extent of currency hedging in the Indian non-financial firms, consistent with prior research. Additionally, institutional ownership is also a significant determinant of their hedging extent. The present study contributes to the understanding of hedging behaviour in an emerging market and offers practical insights to corporate managers seeking to strengthen risk management practice and safeguard against currency fluctuations.

Keywords: corporate hedging theories; corporate risk management practices; foreign currency hedging; currency risk.

DOI: 10.1504/IJFMD.2025.151628

International Journal of Financial Markets and Derivatives, 2025 Vol.10 No.2, pp.155 - 176

Received: 02 Sep 2024
Accepted: 08 Nov 2025
Published online: 10 Feb 2026 *

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