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International Journal of Business Management and Economics and Trade, 2022, 3(4); doi: 10.38007/IJBMET.2022.030406.

The Influence of Financial Derivatives on the Financial Risk of the Company


Fangjie Sheng

Corresponding Author:
Fangjie Sheng

Shanghai University, Shanghai 201800, China


Financial derivatives for a company, like a double-edged sword. When operating well, it can effectively relieve the operating pressure and avoid risks of enterprises, and bring smooth cash flow. Throughout the history of listed companies, the financial derivatives brought by the thunder events also frequent occurrence, listed companies therefore delisted. This paper first finds out what purpose the company uses financial derivatives by combining the previous literature, and then establishes a regression model to explore how financial derivatives affect the company's financial risk. The regression results are significant. Finally, combining the literature and research results, it makes a flow chart of the company's use of financial derivatives. This paper finds that companies that use financial derivatives face smaller financial risks than those that do not, indicating that financial derivatives play a prominent role in managing financial risks.


Financial Derivatives, Financial Risk, Literature Analysis, Empirical Analysis

Cite This Paper

Fangjie Sheng. The Influence of Financial Derivatives on the Financial Risk of the Company. International Journal of Business Management and Economics and Trade (2022), Vol. 3, Issue 4: 48-55. https://doi.org/10.38007/IJBMET.2022.030406.


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