The Impact of Financial Derivatives on Economic Growth: Implications for Financial Risk Management

2021 ◽  
pp. 254-263
Author(s):  
Weiting Liu
Keyword(s):  
Economic Growth ◽  
Risk Management ◽  
Financial Risk ◽  
Financial Derivatives ◽  
Financial Risk Management ◽  
The Impact

scholarly journals PARAMETRIZATION OF THE MECHANISM OF FINANCIAL RISK MANAGEMENT IN THE DIGITAL SECURITIES CIRCULATION

2019 ◽  
pp. 77-83
Author(s):  
Oleksandr Volodmyrovych Lutskevych ◽  
Keyword(s):  
Risk Management ◽  
Social Life ◽  
Financial Risk ◽  
State Regulation ◽  
Securities Market ◽  
Financial Risks ◽  
Negative Consequences ◽  
Management Mechanism ◽  
Financial Risk Management ◽  
The Impact

Urgency of the research. Digital technologies are transforming all spheres of social life, and the financial sphere is no exception. In general, such trends cannot but leave an imprint on approaches to managing the financial risk of digital securities. Target setting. Currently, scientific and methodological support for the formation of a mechanism for managing the financial risks of digital securities is in the early stages of development, while the quality of state regulation and supervision of participants in digital securities directly depends on the effectiveness of the current mechanism for managing such risks. Actual scientific researches and issues analysis. Theoretical and applied aspects of the securities market, features of the impact of financial innovations and financial risk management in the field of securities circulation, are researched by V. Bodrov [1], O. M. Kovaleva [2], I. V. Krasnova [3], N. V. Tkachenko [4], Yu. B. Kolupaeva [5] and others. Uninvestigated parts of general matters defining. The methodology of formation the mechanism for managing the financial risks of digital securities needs more precise research. The research objective. Deepening the scientific understanding of the term "financial risk management mechanism for the circulation of digital securities" will ensure to outline ways of increasing the efficiency of this financial instrument usage. The statement of basic materials. This article analyzes the essence of the term "financial risk management mechanism". The construction of the mechanism has been adapted to the specifics of digital securities risk management. Conclusions. The essence of the mechanism of financial risks management of digital securities circulation is improved due to application of a set of methods for identification, quantitative and qualitative analysis, measures to prevent realization and / or reduction of negative consequences of financial risks of digital securities circulation, ways of control over some events.

scholarly journals Toolset for financial risk strategic assessment in corporations based on stochastic modeling

2020 ◽  
Vol 9 (28) ◽  
pp. 451-464
Author(s):  
Viktoriya Manuylenko ◽  
Denis Ryzin ◽  
Natalia Gryzunova ◽  
Olga Bigday ◽  
Olga Mandrytsa
Keyword(s):  
Risk Assessment ◽  
Risk Management ◽  
Financial Risk ◽  
Assessment Model ◽  
Financial Risks ◽  
Financial Leverage ◽  
Financial Risk Management ◽  
Environment Factors ◽  
Target Values ◽  
The Impact

The study substantiates the need to develop and test a model for assessment of strategic financial risk level in corporations. It implies modeling for two indicators: relative (financial leverage) and absolute (external capital of indicators). The model should also take into account influence of emergent environment factors and most stakeholder groups’ interests when building scenarios for their behaviors in the financial markets –Implementation of the model allows establishing financial risk target values considering deviation calculations between the indicators’ modeled and actual values simultaneously determining both tactical and strategic guidelines for Financial Risk Management Policy in corporations, which should involve stakeholders into financial risk-taking process. The model implementation also should be the basis for development and improvement of risk-based forecasting tools, business planning and stress testing. The toolkit for assessing level of current and strategic financial risks in corporations based on simulation modeling was developed and implemented with attraction of general scientific and special methods. Direct results of the study are as follows: in theoretical block of the research – essentially, main attributes of financial risks classification for corporations are identified; they are recognized by time as retrospective, current and strategic financial risks, and correct classification of the latter allows their identification, evaluation and regulation; in practical block of the research – evaluation of financial risk in corporations reveals that the risk apart from other internal factors is highly affected by the level of financial leverage, where its high value increases financial risk; still, corporations do not take into account the influence of environmental factors on its level; the role of tax risk as a part of financial risk is not significant, still it is unfortunate that the Russian legislation system allows double taxation on income tax in the form of dividends, and dividend policy of Russian corporations is unstable; in methodological block of the research –financial risk assessment model for corporations was developed and tested on a platform of a special new software product that determines the target level of financial risk; the model differs from standard approaches to financial risk assessment as it carries strategic forecasting nature and takes into account the impact of emergent environment factors; thus it promotes new areas in strategic financial risk management.

scholarly journals Role of the Pension Protection Fund in financial risk management of UK defined benefit pension sector: a multi-period economic capital study

2014 ◽  
Vol 9 (1) ◽  
pp. 134-166 ◽  
Author(s):  
Wei Yang ◽  
Pradip Tapadar
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Capital Requirements ◽  
Economic Capital ◽  
Defined Benefit ◽  
Policy Makers ◽  
Financial Risk Management ◽  
The United Kingdom ◽  
Pension Schemes ◽  
The Impact

AbstractWith the advent of formal regulatory requirements for rigorous risk-based, or economic, capital quantification for the financial risk management of banking and insurance sectors, regulators and policy-makers are turning their attention to the pension sector, the other integral player in the financial markets. In this paper, we analyse the impact of applying economic capital techniques to defined benefit pension schemes in the United Kingdom. We propose two alternative economic capital quantification approaches, first, for individual defined benefit pension schemes on a stand-alone basis and then for the pension sector as a whole by quantifying economic capital of the UK’s Pension Protection Fund, which takes over eligible schemes with deficit, in the event of sponsor insolvency. We find that economic capital requirements for individual schemes are significantly high. However, we show that sharing risks through the Pension Protection Fund reduces the aggregate economic capital requirement of the entire sector.

scholarly journals Alleviating Coordination Problems and Regulatory Constraints Through Financial Risk Management

2013 ◽  
Vol 03 (02) ◽  
pp. 1350009 ◽  
Author(s):  
Marcel Boyer ◽  
M. Martin Boyer ◽  
René Garcia
Keyword(s):  
Risk Management ◽  
Financial Risk ◽  
Market Price ◽  
Empirical Support ◽  
Cash Flows ◽  
Financial Derivatives ◽  
Financial Risk Management ◽  
Regulatory Constraints ◽  
Coordination Costs ◽  
Price Of Risk

Seeing the firm as a nexus of activities and projects, we propose a characterization of the firm where variations in the market price of risk should induce adjustments in the firm's portfolio of projects. In a setting where managers disagree with respect to what investment maximizes value, changing the portfolio of projects generates coordination costs. We then propose a new role for financial risk management based on the idea that the use of financial derivatives reduces coordination costs by moving the organization's expected cash flows and risks toward a point where coordination in favor of real changes is easier to achieve. We find empirical support for this new rationale for the use of financial derivatives, after controlling for the traditional variables explaining the need for financial risk management.

scholarly journals Corporate governance and firm performance

Accounting ◽  
2021 ◽  
pp. 13-22 ◽  
Author(s):  
Mulyanto Nugroho
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Stock Return ◽  
Financial Risk ◽  
Manufacturing Companies ◽  
Financial Risk Management ◽  
Audit Opinion ◽  
Going Concern ◽  
Good Corporate Governance ◽  
The Impact

This research discusses and analyzes scientific, macroeconomic, financial risk management, audit views, stock returns, investment decisions, funding decisions, and good corporate governance as a moderator. There are 147 samples of manufacturing companies listed on the Indonesia Stock Exchange. The results of this study indicate that there are four insignificant hypotheses. The results indicate: Macroeconomics does not have a substantial effect on Financial Risk Management, Good corporate governance (GCG) is having no significant impact on Going Concern Audit Opinion. Stock Return is having no significant effect on Going Concern Audit Opinion; GCG does not moderate the impact of Stock Return on Going Concern Audit Opinion when the level of significance is five percent.

scholarly journals CHALLENGES AND PATHWAYS TO IMPROVE COMPANY’S FINANCIAL MANAGEMENT BY RISK MINIMIZATION

2019 ◽  
Vol 131 (1) ◽  
pp. 49-57
Author(s):  
Olena V. Arefieva ◽  
Iryna M. Miagkyh ◽  
Antonina M. Yashchuk
Keyword(s):  
Risk Management ◽  
Financial Management ◽  
Financial Risk ◽  
Management Practices ◽  
Risk Minimization ◽  
Financial Loss ◽  
Financial Risk Management ◽  
The Government ◽  
Business Entities ◽  
The Impact

This paper seeks to explore the essence of financial activity and its principal objectives in the process of business functioning as well as the effects from changes in the capacity and structure of the company's equity and attracted capital. The study provides insights on the impact of financial management practices on the overall company performance and payment of financial liabilities to the government or other business entities along with identifying the key problems and barriers hindering successful development of modern enterprises. The nature of financial risk arising in the process of financial activities or financial transactions has been revealed. It is argued that the given classification of financial risks (systematic (market) / unsystematic (specific) risks) enables to take timely and relevant risk elimination or risk reduction measures, in particular, deploy risk mitigation methods to those risks which cannot be avoided. The purpose of financial risk management is to minimize financial loss. The paper offers an overview of the factors that negatively affect a company’s financial performance and discusses the types of risks that inhibit company’s good performance and further growth. The study findings suggest the priority areas in financial risk management and discuss the risk management strategies by disclosing the types of company financial stabilization mechanisms (operational, tactical and strategic), along with presenting the methods for financial risk minimization as well as a financial toolkit to enhance the company’s risk management policies to prevent possible negative implications.

scholarly journals Assessing financial risk management in local governments

2021 ◽  
Vol 2 (4) ◽  
pp. 10-23
Author(s):  
Tamer Aksoy ◽  
Yunus Emre Asan
Keyword(s):  
Risk Management ◽  
Local Governments ◽  
Financial Risk ◽  
Management Practices ◽  
Financial Statements ◽  
Financial Risks ◽  
Counterparty Risk ◽  
Financial Risk Management ◽  
The Impact ◽  
Budget Revenue

The purpose of this study is to examine the impact of the financial risks local governments are exposed to within the scope of financial risk management practices. ?stanbul Metropolitan Municipality (?MM) was selected for this study because it is the largest local government with the highest budget. ?n the study, the development of financial risk performance of ?MM between the years 2008-2018 was examined in the light of the risks ?MM is exposed to. The main results regarding the risks faced by ?MM during the period are as follows: Financial data obtained from the financial statements of ?MM were used to examine the performance of listed risks& effects they have on the budget of ?MM. The results indicate that (i) risk of Dependence on Shares from the central budget revenue; (ii) ?MM was directly dependent on the central budget in terms of revenues, so in this period, the risk of dependency was high in terms of counterparty risk.

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