Hedging strategies and performance of the US financial holding companies: A dynamic frontier analysis

Date
2021
Authors
Nourani, Mohammad
Chen, Fu-Chiang
Gurrib, Ikhlaas
Kweh, Qian Long
Wu, Yun-Hao
Journal Title
Journal ISSN
Volume Title
Publisher
Inderscience Publishers
Abstract
Globalisation led to dynamic developments in the area of financial innovation. The main object of this study is to shed light into the relationship between hedging strategies and operational performance. We initially employed a dynamic data envelopment analysis model to incorporate carry-over items in order to assess the long-term operating performance of the top 50 US financial holding companies (FHCs) over the period 2005-2009. We then evaluated the operating performance under four different hedging measures and eight sub-industries. Findings show that significant differences exist among sub-industries on the overall mean operating performance of the US FHCs, as the financial situation changes over time. Empirically, we also provide evidence that the choice of an appropriate hedging strategy matters when it comes to operating performance. Overall, we support that choosing a suitable hedging strategy is crucial for FHCs even after a series of structural reforms following the latest global financial crisis. Copyright © 2021 Inderscience Enterprises Ltd.
Description
This article is not available at CUD collection. The version of scholarly record of this article is published in International Journal of Business Excellence (2021), available online at: https://doi.org/10.1504/IJBEX.2021.115835
Keywords
Data envelopment analysis, DEA, DSBM, Dynamic slack-based measures, FHC, Financial holding companies, Hedging strategies
Citation
Nourani, M., Chen, F., Gurrib, I., Kweh, Q. L., & Wu, Y.H. (2021). Hedging strategies and performance of the US financial holding companies: A dynamic frontier analysis. International Journal of Business Excellence, 24(3), 295-320. https://doi.org/10.1504/IJBEX.2021.115835