The Determinants of Derivatives Use by Commercial Banks in GCC Countries (U.A.E, Bahrain, Qatar and Saudi Arabia) an empirical study from 2000 to 2013 using Panel data

Abstract

According to banks from emerging countries exactly from GCC countries covering the whole period from 2000 to 2013, the objective of this thesis is firstly, to investigates whether the use of derivatives instruments makes banks reducing their systematic risks. Secondly, if the increase in performance indexes tends to decrease the use of derivatives instruments, in addition, knowing the effect of the off-balance sheet on derivatives use, and finally, the effect of macro-economic variables on derivatives use. The main results reveal that the use of derivative instruments decrease banks systematic risks, while the performance indexes effect is not obvious, it differ between a negative and a positive effect. However, banks use derivatives with the increase in off balance sheet to hedge from their risks. Finally, the rise of GDP does not give a safety feeling to managers of banks, so they tend to use derivatives to hedge, in addition, they use them also with the increase in inflation and unemployment rates for hedging purposes