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Accounting for the Level of Success of Firms in Achieving Their Objectives for Using Derivatives

  • Frank Bezzina
  • Simon Grima
  • Joseph Falzon
Chapter
  • 256 Downloads
Part of the Palgrave Macmillan Studies in Banking and Financial Institutions book series (SBFI)

Abstract

Derivatives can be viewed as a socially constructed and need-driven innovation in the financial economy, with their roots well ingrained in the events and circumstances of the real economy (Sharma, 2008). As the transition from a production-based economy to a financial economy was taking shape during the late 1960s and 1970s, the need to control highly increased volatility and fluctuations due to inflation problems, currency problems, debt defaults and many other factors increased in importance (Fischer, 1993). The increased need for controls such as regulation, risk management and audits is noted in literature as being the main reason for the increased global use of derivatives (Brenner, 2002). However, despite the fact that the trade of derivative products have mushroomed (Bank for International Settlements Quarterly Review, March 2010), derivative contracts have tended to make the headlines only when firms and financial institutions made spectacular financial losses (Hull, 2008).

Keywords

Risk Management Credit Default Swap Market Risk Derivative Activity Internal Auditor 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Frank Bezzina, Simon Grima and Joseph Falzon 2013

Authors and Affiliations

  • Frank Bezzina
    • 1
  • Simon Grima
    • 2
  • Joseph Falzon
    • 3
  1. 1.University of MaltaMalta
  2. 2.Department of Banking and Finance, Faculty of Economics, Management and AccountancyUniversity of MaltaMalta
  3. 3.Department of Banking and Finance, and the Dean of the Faculty of Economics, Management and AccountancyUniversity of MaltaMalta

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