Abstract
This study aims to survey the risk management practices, to investigate the patterns of the use of derivative and to examine which firm-specific factors determine the decision of the Pakistani Financial sector to use derivatives. Total eight years of accounting data from financial companies of Pakistan are used for this study. The logit regression model is applied to empirically test hypotheses of the study. The findings show that organizations are motivated to enter into derivative markets when they are short of funds or have high growth or large amount of debt or operate internationally.
Keyword(s)
Financial Derivatives, Hedging, Solvency, growth, Foreign business operation, Size, age