The effectiveness of financial derivatives in managing foreign exchange exposure among commercial banks listed at the Nairobi Securities Exchange
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Date
2013-10Author
Nasurutia, Aaron
Type
ThesisLanguage
enMetadata
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This study was conducted with the aim of establishing the effectiveness of derivatives in
managing foreign exchange exposure among commercial banks in Kenya. The study
adopted a descriptive research design. The population of the study constituted all 10
listed commercial banks that were in operation during the study period from January,
2008 to December, 2012. A census of the population was conducted. Analysis was
conducted through the use of regression analysis. The results indicated that derivative
usage was found to have a negative relationship with foreign exchange exposure meaning
that an increase in derivative usage resulted in a corresponding decrease in foreign
exchange exposure. The relationship was in addition found to be significant as indicated
by the p-value (0.0357>.05). The study consequently concluded that there was a negative,
significant relationship between derivative usage and foreign exchange exposure for
banks’ listed in the NSE. Consequently, therefore, derivative usage was found to be
effective in management of foreign exchange exposure. On the basis of the findings, the
study recommended that since derivative usage and foreign currency exposure are
significantly and negatively related, derivatives can effectively be used by banks in
Kenya to manage foreign exchange exposure.
Citation
Degree Of Master Of Business AdministrationPublisher
University of Nairobi School of Business
Description
A research project submitted in the partial fulfillment of the requirement for the award Of Degree Of Master Of Business Administration, School Of Business, University Of Nairobi