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Top1. Introduction
Due to the difficulties that financial markets have experienced, more attention has been paid to issues related to the security and stability of the financial system as a whole, and in particular the banking sector. Limited risk management leaves financial institutions more exposed to shocks than they may be and is probably a major factor in financial crises, so measures for stricter oversight and greater caution during risk performance analysis have increased. of banks. The financial value of financial institutions is a key determinant of their risk management. There is a statistically and economically significant positive relationship between risk management and net worth in both institutions and within institutions over time.
Financial institutions play a key role in macroeconomics and in the transmission of monetary policy. (Gertler and Kiyotaki, 2010). Understanding their exposure to interest rate shocks and experience-seeking contexts is thus essential to monetary and macro-prudential policy (Kashyap and Stein 2000; Jiménez et al.,2012). A dynamic model where financing and risk management are subject to the same financial constraints, that is, promises to both funders and hedging parties must be collateralized, both requiring net worth (Rampini and Viswanathan, 2010). Therefore, a dynamic trade-off between lending and risk management: institutions Limited financial institutions must share their limited net worth between them. The cost of earlier borrowing or shortening the credit lines of more borrowers is higher at the limit of such institutions. In addition, institutions that provide more financial protection also provide operational protection. Derivatives in financial markets as financial instruments have been promoted as risk management tools for hedging purposes, but these instruments can also be used for speculation and arbitration.
Finally, we understand that it is the net worth of financial institutions, that is, their economic value, which determines their hedging policy more than their regulatory capital. The lending policy of financial institutions which engage in derivatives hedging is less sensitive to interest rate spikes than that of non-user institutions (Purnanandam 2007). Inaccurate bright derivatives, the risks of managing the required use of indevetrate, however, are giving greater appreciation, giving great value to the benefit and central role of financial institutions in macro-financial linkage. This paper contributes to a better understanding of this market by documenting new empirical regularities in the cross section and time dimension.