resulting volatility can induce risk-averse transactors who face transaction costs to desert these markets altogether. Thus … thinness and the consequent price volatility may become joint self-perpetuating features of an equity market, whatever the … volatility of asset fundamentals. If, however, appropriate incentive schemes are adopted to encourage entry of additional …

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 …

This paper examines and compares the effectiveness of hedging and buffer-stock strategies for stabilizing the revenues …

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 …

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 … hedging needs have a strong propensity to save cash out of cash flows while leaving their debt positions unchanged. In …