The paper develops a network-based framework to assess the impact of a firm's financial interconnections and interdependencies on it optimal hedging and risk transfer strategy. This is important consideration as risk concentrations and propagation embedded in risk transfers pose as a significant...

In this paper, we derive and assess a framework in which a firm's financial environment is an integral part of its hedging decisions. In the framework, the characteristics of firms in the network and their interconnections affect the firm's risk management strategy through impact on contract...