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February 14, 2026RisksOpen Access

The Impact of Financial Derivatives on European Bank Value and Performance

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Authors

BABassam Al-OwnMSMohannad Obeid Al ShbailZJZaid Jaradat

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Overview

Analysis reveals positive effects of hedging derivatives on bank performance, indicating caution needed for trading derivatives.

Key Points

  • This research investigates how financial derivatives affect the value and performance of European banks.
  • Utilized a panel dataset of 385 European bank-year observations from 2012 to 2022.
  • Conducted multivariate statistical analyses including OLS, random-effects, and FGLS regressions.
  • Examined the impact of derivatives used for hedging versus trading on bank performance.
  • Found a positive and significant relationship between hedging derivatives and bank performance.
  • Identified a negative effect of trading derivatives on bank performance and value.
  • Concluded that hedging does not enhance overall bank value, warranting careful justification to investors.

Cite This Study

Al-Own et al. (2026) studied this question.

synapsesocial.com/papers/6990113f2ccff479cfe57ba0https://doi.org/10.3390/risks14020039
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Also Consider

Synapse has enriched 3 closely related papers on similar clinical questions. Consider them for comparative context:

  1. 1How Are Derivatives Used? Evidence from the Mutual Fund Industry1999 · 442 citations
  2. 2Use of Derivative and Firm Performance: Evidence from the Chinese Shenzhen Stock Exchange2021 · 9 citations
  3. 3The Effects of Derivatives on Firm Risk and Value2011 · 444 citations