On the Determinants of Interest Rate Swap Usase By Larse Indian Companies

Abstract

Corporations in India, as in the rest of the world, use hedges to protect themselves against a quartet of exposures- swings in interest rates, commodity prices, foreign exchange rates and equity values. In the wake of the global financial crisis and significant losses on derivatives transactions announced by Indian companies recently, A study on the determinants of derivative usage by these companies is especially significant. An Interest Rate Swap (IRS) is one of the financial derivative instruments in which one party exchanges a stream of interest payments for another party's stream of cashflows.