Abstract:

Financial derivatives are financial instruments that are actively used to increase the efficiency and depth of the capital market. Financial derivatives are tools used for the purpose of speculation, arbitration and risk protection. Due to the financial liberalization and the developments in the financial markets, international trade risks have increased and these banks have brought to the entry and use of self-protection instruments. Given the high levels of economic and financial risks, these risks faced by market participants and investors contribute to the economic development of a country by making financial derivatives manageable. In this context, to analyze the impact of the use of derivatives on bank risk, 50 banks that have been continuously operating in transition countries, such as Hungary, Czech Republic, Romania, Slovenia, Russia, Bulgaria, Croatia and Poland, between 2011 and 2018, have been included in the framework of work. According to the results obtained from panel data analysis, there is a negative and statistically meaningful relationship between the use of derivatives and bank risk.