“The use of Interest Rate Derivatives by non-financial Firms”

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Honavar, Gaurav (2015) “The use of Interest Rate Derivatives by non-financial Firms”. [Dissertation (University of Nottingham only)]

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Abstract

The topic of discussion is the use of Interest Rate Derivatives by non-financial firms in the

UK. The data of the non-financial firms is gathered from the information available in the

financial statements. The objective of the study was to analyse how firms use floating rate

debts or fixed rate debts to hedge their interest rate risk. It is found that bank debts for nonfinancial

firms is set on a floating rate, firms with higher cash holdings choose to have more

floating rate debt, firms with high leverage prefer to have fixed rate debts, firms manage the

volatility in their earnings before interest and tax (EBIT) using floating rate debts and firms

with credit ratings usually desire for a fixed rate debt. The findings for these independent

variables is found to be consistent with existing literature. However, tests for the effects of

firm size, short-term debt and long-term debts on the floating rate debt were futile since

they did not yield statistically significant results.

Item Type: Dissertation (University of Nottingham only)
Depositing User: Honavar, Gaurav
Date Deposited: 23 Mar 2016 14:31
Last Modified: 19 Oct 2017 14:53
URI: https://eprints.nottingham.ac.uk/id/eprint/30148

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