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Contribution Details
| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | Derivatives Hedging and Bank Lending: Evidence from U.S. Bank Holding Companies |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 31 |
| Date | 2019 |
| Abstract Text | This thesis investigates the eect of derivatives hedging employed by banks on the bank lending channel of the US monetary policy transmission mechanism from the beginning of 1995 through the end of 2018. My ndings appear consistent with theoretical studies on corporate hedging and its in uence on internal cash- ow stability and cost of external nancing. I show that banking corporations that manage their exposure to interest rate risk by means of derivative products, independent of their asset size, are in a position to insulate their lending business from monetary contractions. Finally, I nd that derivative nonuser banks are vulnerable to monetary tightening, because under such condition they slash their lending volumes. These results are in line with empirical evidence associating interest rate derivatives usage and loan portfolio growth. |
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