Abstract
The study aimed to investigate firm decisionsofusing interest rate
derivatives and factors affecting this decision. Study is conducted by
selecting data of 191 non-financial sector companieslisted on PSX from
2010 to 2015.Logit model was employed to detect contribution
magnitude of foreign sales, profitability, leverage, liquidity, price to
earnings, interest coverage ratio and dividend payout towards
decisions by firm of using the interest rate derivatives. The expected
users of interest rate derivatives for purpose of interest rate exposure
management were the firms with high foreign sales,lesser leverage, low
profits,low dividend payout ratio andlow interest coverage ratio. The
examination concludes that these derivatives are financial engineering
tools and serve as immunization instruments for a firm from anticipated
future financial risk.
Keywords: Risk management, Interest rate derivatives, Foreign sales,
Hedging, Panel logit model
Taqadus Bashir. (2019) Interest Rate Risk Management by Financial Engineering in Pakistani Non-Financial Firms, Journal of Managerial Sciences, Volume 13, Issue 3.
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