We use a model of a bank under perfect competition to examine effects of derivatives for tradeable and non tradeable risks on optimal bank behavior in the deposit and loan markets. If both credit risk and interest risk are tradeable, we identify simple decision rules which require only market...

This article presents a model of a risk‐averse multinational firm facing risk exposure to a foreign currency cash flow. Forward markets do not exist between the firm's own currency and the foreign currency, but do exist for a third currency. Because a triangular parity condition holds among...

The paper examines the impact of uncertainty on the decision problem of an international firm. The uncertainty under which the firm decides on home and foreign supply is affected by an information system that conveys public signals about the random spot exchange rate. Our notion of transparency...

Due to globalization competitive firms face increasing economic opportunities for locating their activities in countries, regions and cities that provide the best business environment for their specific needs. In our study we focus on the impact of economic risk and risk preferences upon...

Die vorliegende Arbeit untersucht ein Duopol bei unsicherer Nachfrage unter Risikoaversion. Die Produktion der gesamten Industrie fällt durch die Einführung von Nachfrageunsicherheit; der Marktpreis steigt wegen des schwächeren Wettbewerbs. Damit ist die Veränderung des Gewinns und des...

The aim of this study is to analyze the importance of the elasticity of risk aversion with regard to an increase in exchange rate risk for exports and hedging in an international firm. Mean-variance preferences allow for an immediate study of the entailed substitution and income effect. These...

The gravity equation for international trade is probably the most important tool in international economics to explain and estimate trade flows. In its simplest form, it states that the exports between any two given countries are a multiplicative function of these countries’ economic size, as...