EFFECTS OF SELECTED FINANCIAL HEDGING STRATEGIES ON THE MARKET VALUE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA
DOI:
https://doi.org/10.18623/rvd.v22.n2.3309Palabras clave:
Accounting Derivatives, Futures Contracts, Interest Rate Swaps, Index Futures, Market Value, Deposit Money BanksResumen
This study investigated the effects of selected financial hedging strategies on the market value of quoted deposit money banks in Nigeria. Adopting an ex-post facto research design, the study utilized panel data of 13 listed deposit money banks for the period between 2015 and 2024. Data were gathered from published financial statements and were examined by means of Panel Estimated Generalized Least Squares with cross-section random effects. The Hausman test confirmed the use of the random effects model (Chi-Sq. = 0.582; p = 0.997). The regression model revealed that futures contract had a positive and significant effect on market value (coefficient = 0.765; p = 0.000). Interest rate swap also had a positive and significant impact on it (coefficient = 6656.659; p = 0.000). Index futures showed an insignificant relationship with market value (coefficient = 1517.571; p = 0.813). The overall model was significant (F-statistic = 11.309; p = 0.000) and explained 32% of the variation in market value (Adjusted R² = 0.318). The study concluded that derivative financial instruments, namely futures and interest rate swaps, when employed strategically and revealed transparently, had a positive impact on market valuation. It recommended increased use of these instruments and improved disclosure mechanisms according to international financial reporting standards to facilitate increased investor confidence and market trust.
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