Title: Does the usage of financial derivatives decrease the systemic risks in the GCC banks? An empirical study

Authors: Nesrine Bendima; Mohamed Benbouziane; Ali Bendob; Naima Bentouir

Addresses: Department of Commercial Sciences, University of Abou Bekr Belkaïd, 22, Abi Ayad Abdelkrim Street, Fg Pasteur B.P 119-13000, Tlemcen, Algeria ' Departement of Economics, University of Abou Bekr Belkaïd, 22, Abi Ayad Abdelkrim Street, Fg Pasteur B.P 119-13000, Tlemcen, Algeria ' Department of Economics, Management and Commercial Sciences, University Center of Belhadj Bouchaib Ain Temouchent, Sidi Bel Abbes Road B.P 284-46000, Ain Temouchent, Algeria ' Department of Economics, Management and Commercial Sciences, University Center of Belhadj Bouchaib Ain Temouchent, Sidi Bel Abbes Road B.P 284-46000, Ain Temouchent, Algeria

Abstract: In the financial markets, the financial institutions and banks use the financial derivatives for hedging against systemic risks, for speculation or/and arbitrage. This study aims to investigate mainly whether the use of financial derivatives makes banks reducing their systemic risks. Using the data of 19 commercial banks from GCC during the period from 2000 to 2013, the main results reveal that the use of financial derivatives decrease banks systemic risks, while the performance indexes effect is not obvious, it differs between a negative and a positive effect. However, banks use derivatives with the increase in off-balance sheet to hedge their risks. Finally, the rise of GDP does not give a safety feeling to managers of banks, so they tend to use derivatives to hedge, in addition, they use them also with the increase in inflation and unemployment rates for hedging purposes.

Keywords: financial derivatives; systemic risks; banks performance; panel data; hedging; GCC banks; speculation; subprime crisis; off balance sheet; commercial banks.

DOI: 10.1504/IJMED.2019.097804

International Journal of Management and Enterprise Development, 2019 Vol.18 No.1/2, pp.119 - 150

Available online: 06 Feb 2019 *

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