The Impact of Trading and Hedging Derivatives on Banking Efficiency in The Eurozone

Alexandre Girard, Yulia Titova

Résultats de recherche: Papier de travailArticle de travail

Résumé

The impact of derivatives is again in caution in the banking industry since the emergence of the subprime crisis. This debate is not recent as Diamond already introduced it claiming for derivatives use to let banks focus on their delegate monitoring comparative advantage. We contribute to this debate by analysing the impact of derivatives on banking efficiency in the Eurozone over 2006-2010.
The Eurozone is particularly relevant for this analysis as it is the most integrated banking sector with comparable accounting rules. We measure efficiency with two non-parametric approaches to avoid specication issues, data envelopment analysis and free disposal hull approach. Our unique dataset allows us to disentangle all types of derivatives and their impact on efficiency. We conclude that both hedging and trading derivatives enhanced banking efficiency in the Eurozone over our sample.
langue originaleAnglais
Etat de la publicationEn préparation - 2013

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