Research On The Impact Of Financial Derivatives Trading On The Profits And Risks Of Listed Commercial Banks

With the advancement of China’s financial reform,the profit of deposit and loan business of commercial banks has been continuously squeezed,and the marketization of interest rates,the reform of the exchange rate system,the renminbi to join the SDR,and the deepening of internationalization,the asset price changes is more elusive.In this context,various commercial banks are looking for new financial instruments to increase revenue and effectively avoid the increasing risks.Financial derivatives are one of the important financial instruments selected.Financial derivatives can spread risk and increase profits,but if you do not operate properly,the losses are huge.The business behavior of commercial banks is closely related to the stability of the entire financial system.Once a serious risk allocation error occurs in a bank,it is easy to transmit the risk to the associated bank,and even induce systemic risks,while holding on to financial systemic risks is the key task of the economic battle in the next three years.In this context,it is of great research value to study the impact of financial derivatives transactions on the profit and risk of commercial banks.Based on the relevant literature,this thesis explores the impact mechanism between financial derivatives and bank profit and risk,and objectively analyzes the current status and shortcomings of banking financial derivatives transactions.Then,based on16 sample bank data,empirically explore the relationship between the overall and various types of financial derivatives transactions and bank profit and risks,and whether corporate governance plays a regulatory role.The empirical results show that:(1)Financial derivatives transactions is generally positively related to bank profitability.Banks’ reasonable and effective financial derivatives transactions can improve their profitability.In terms of subdivided products,foreign exchange derivatives and interest rate derivatives can promote the improvement of bank profitability.(2)Corporate governance has a significant regulatory effect on the relationship between financial derivatives transactions and bank profitability.When the corporate governance comprehensive score is low,financial derivatives transactions has a gentle positive effect on bank profitability.As the corporate governance comprehensive score increases,this positive effect becomes more obvious.In terms of subdivided products,corporate governance also has a significant regulatory effect on the relationship between foreign exchange derivatives and bankprofitability.(3)Financial derivatives transactions are generally negatively correlated with bank risks.Banks’ proper financial derivatives transactions can effectively hedge the risks they face.In terms of subdivided products,foreign exchange derivatives and interest rate derivatives can also reduce the risk level of banks.(4)Corporate governance has a regulatory effect on the relationship between financial derivatives transactions and bank risk.When the corporate governance comprehensive score is low,financial derivatives can hedge the bank risk.As the corporate governance comprehensive score increases,this hedging effect will be significant strengthen.In terms of subdivided products,corporate governance also has a significant regulatory effect on the relationship between interest rate derivatives and bank risk.