futures contracts. Their hedging demand is met by financial intermediaries who act as speculators, but are constrained in risk …-taking. Increases (decreases) in producers’ hedging demand (the risk-bearing capacity of speculators) increase the costs of hedging … 1980-2006, we show that producers’ hedging demand - proxied by their default risk - forecasts spot prices, futures prices …

stochastic. It then uses the results to explain the dynamics of hedging. Bankruptcy rules are important determinants of corporate … produce the same prices, they can have very different hedging implications. We show that empirical results on the relation …

This paper proposes a theory of twin banking-currency crises in which both fundamentals and self-fulfilling beliefs …

will allocate cash flows into cash holdings if their hedging needs are high (i.e., if the correlation between operating … if their hedging needs are low. The empirical examination of debt and cash policies of a large sample of firms reveals … evidence that is consistent with our theory. In particular, our evidence shows that financially constrained firms with high …

Exchange risk hedging in a static (i.e. one-period) setting is extremely straightforward. The variance-minimizing hedge … thereafter, perhaps, leaving the hedge untouched until the cash flow is received or paid. The precise mathematical theory in …

and implement tests of hedging that use the information contained in the actual portfolio of the investor. We use a unique …. We show that investors do not engage in hedging, but invest in stocks closely related to their non-financial income. We …

the supply of commercial and industrial (C&I) loans is constrained. Hedging and bank capital regulation provide reasons …

in a standard framework in which uninformed traders with hedging needs interact with risk-averse informed traders in … hedging and speculative demands: risk-averse arbitrageurs can hedge in the new market to lower the risk of speculative … traders with pure hedging motives in that market to withdraw, so reducing liquidity in the old market. The general point …