Bank-Firm Relationship and the Use of Derivatives in Japan

要約

In this paper, we examine the association between bank-firm relationship and the use of derivatives, in term of decision to use or not to use derivatives as well as the extent of derivatives usage. We employ samples of non-financial companies listed in NIKKEI 225 index from 2005-2009. Using probit regression test, we find that bank-firm relationship and firm’s size positively induce the decision to use derivatives. Meanwhile, using tobit regression test, the result indicate that bank-firm relationship, firm’s size, leverage and dividend yield positively influence the magnitude of derivatives usage. The findings of our paper provide an empirical support for the hypothesis of Hakenes (2004) which argues that bank-firm relationship will benefit firm not only as the sources to grant loan, but also as delegated risk manager which could assist the firm in designing the appropriate hedging instrument.

Keywords: Bank-firm relationship, Derivatives, Hedging.