Vaasan yliopiston opinnäytteet

Kauppatieteellinen tiedekunta, 2017

Piiroinen, Riikka

The Financial Characteristics of Banks that use derivatives: U.S. Evidence

Ohjaaja/Valvoja (DI):
Sami Vähämaa
Tutkinto:
Kauppatieteiden maisteri
Pääaine:
Laskentatoimi ja rahoitus
Koulutusohjelma:
Master's Degree Programme in Finance
Tutkielman kieli:
Englanti
Sivumäärä:
61
This research studies financial characteristics of commercial banks in U.S, which have or have not reported use of derivatives, between the years 2006-2010. This study follows the guidelines of a research by Sinkey and Carter (2000). Previous researches conducted on this topic are used as a foundation when formulating the hypotheses. The data used in the analysis is from 2006 to 2010, consciously including the financial crisis years. The data is gathered from Uniform Bank Performance Reports, which are public documents, published by the Federal Financial Institutions Examination Council. The annual data for the commercial banks is gathered from multiple reports, in order to have the necessary dataset for this research. The gathered data is analysed by utilizing descriptive statistics and the Tobit model. The commercial banks included in this research are also divided into two sub-groups of banks that use and banks that do not use derivatives. The results of this study show the use of derivatives to be more common among larger banks. Similar results are also reported in the earlier researches in this field, reviewed in this study. The banks reporting use of derivatives also show having a more risk prone capital structure, which is studied in the second hypothesis of this research. This also is in line with results of similar studies. The analysis does find a continuously positive relationship between the dependent variable and the variables total assets, notes and debentures, book value of equity and liquidity in the Tobit analysis’ results. There are similarities in the Tobit analysis results until the year 2008, after which the results are more unsystematic. Possible causes for the results obtained are deemed to arise from the financial crisis, globalization, change in the markets and strengthened legislation. The research could be taken further by including more years after the financial crisis to the dataset and taking into account the continuing chances taking place in the financial market.
Avainsanat:
Derivatives, derivative contracts, commercial banks, U.S. banking industry, financial crisis, financial characteristics
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