Title: Hedging strategies and performance of the US financial holding companies: a dynamic frontier analysis

Authors: Mohammad Nourani; Fu-Chiang Chen; Ikhlaas Gurrib; Qian Long Kweh; Yun-Hao Wu

Addresses: School of Management, Universiti Sains Malaysia, 11800 Penang, Malaysia ' Department of Accounting Information, Chihlee Institute of Technology, 313, Sec. 1, Wunhua Rd., Banciao District, New Taipei City 22050, Taiwan ' Faculty of Management, Canadian University Dubai, P.O. Box 117781, 1st Interchange, Sheikh Zayed Road, Dubai, United Arab Emirates ' Faculty of Management, Canadian University Dubai, P.O. Box 117781, 1st Interchange, Sheikh Zayed Road, Dubai, United Arab Emirates ' Risk Management Division, E. SUN Bank, E. SUN Financial Holding Co., Ltd., 2F, No. 115, Sec. 3, Minsheng E. Rd. Taipei 10546, Taiwan

Abstract: Globalisation led to dynamic developments in the area of financial innovation. The main object of this study is to shed light into the relationship between hedging strategies and operational performance. We initially employed a dynamic data envelopment analysis model to incorporate carry-over items in order to assess the long-term operating performance of the top 50 US financial holding companies (FHCs) over the period 2005-2009. We then evaluated the operating performance under four different hedging measures and eight sub-industries. Findings show that significant differences exist among sub-industries on the overall mean operating performance of the US FHCs, as the financial situation changes over time. Empirically, we also provide evidence that the choice of an appropriate hedging strategy matters when it comes to operating performance. Overall, we support that choosing a suitable hedging strategy is crucial for FHCs even after a series of structural reforms following the latest global financial crisis.

Keywords: hedging strategies; data envelopment analysis; DEA; dynamic slack-based measures; DSBM; financial holding companies; FHC.

DOI: 10.1504/IJBEX.2020.10024099

International Journal of Business Excellence, 2021 Vol.24 No.3, pp.295 - 320

Received: 06 Feb 2019
Accepted: 04 Jul 2019

Published online: 25 Jun 2021 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article