• DOI:10.1017/S0022109011000391
Corpus ID: 13928534

The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps

@article{Chernenko2011TheTS,
  title={The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps},
  author={S. Chernenko and Michael W. Faulkender},
  journal={Journal of Financial and Quantitative Analysis},
  year={2011},
  volume={46},
  pages={1727-1754}
}

S. Chernenko, Michael W. Faulkender

Published 2011

Economics

Journal of Financial and Quantitative Analysis

Existing cross-sectional findings on nonfinancial firms’ use of derivatives that are usually interpreted as the result of hedging may alternatively be due to speculation. Panel data examinations can distinguish between derivatives practices that endure over time and are therefore more likely to result from hedging, and those that are more transient, thus more consistent with speculation. Our decomposition results indicate that hedging of interest rate risk is concentrated among high-investment… CONTINUE READING

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