Derivatives Usage in Risk Management by US and German Non-Financial Firms: A Comparative Survey

Gordon M. Bodnar, Gunther Gebhardt

NBER Working Paper No. 6705
Issued in August 1998
NBER Program(s):International Finance and Macroeconomics

This paper is a comparative study of the responses to the 1995 Wharton School survey of derivative usage among US non-financial firms and a 1997 companion survey on German non-financial firms. It is not a mere comparison of the results of both studies, but a comparative study, drawing a comparable subsample of firms from the US study to match the sample of German firms on both size and industry composition. We find that German firms are more likely to use derivatives than US firms, with 78% of German firms using derivatives compared to 57% of US firms. Aside from this higher overall usage, the general pattern of usage across industry and size groupings is comparable across the two countries. In both countries, foreign currency derivative usage is most common, followed closely by interest rate derivatives, with commodity derivatives a distant third. In contrast to the similarities, firms in the two countries differ notably on issues such as the primary goal of hedging, their choice of instruments, and the influence of their market view when taking derivative positions. These differences appear to be driven by the greater importance of financial accounting statements in Germany than the US and stricter German corporate policies of control over derivative activities within the firm.

download in pdf format
   (175 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w6705

Published: Bodnar, Gordon M. and Gunther Gebhardt. "Derivatives Usage In Risk Management By US And German Non-Financial Firms: A Comparative Study," Journal of International Financial Management and Accounting, 1999, v10(3,Autumn), 153-187.

Users who downloaded this paper also downloaded* these:
Minton, Stulz, and Williamson w11579 How Much Do Banks Use Credit Derivatives to Reduce Risk?
Darby w4801 Over-the-Counter Derivatives and Systemic Risk to the Global Financial System
Stulz w10574 Should We Fear Derivatives?
Dominguez and Tesar w8453 Exchange Rate Exposure
Froot, Scharfstein, and Stein w4084 Risk Management: Coordinating Corporate Investment and Financing Policies
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us