Analysis of the financial derivatives for risk management in the context of financial market instability
Year: 2024
Type: article
Abstract: The study aimed to analyse the possibilities and efficiency of financial derivatives as instruments for hedging and minimizing risks in financial markets. The research methodology included the classification of financial derivatives according to various criteria, including their structure and underlying assets. The main types of derivatives were identified: futures, forwards, options and swaps used to hedge risks in the commodity and financial instruments markets. The results of the study indicate that financial derivatives are substantial in reducing the impact of negative changes in the market, opening new opportunities for investors and companies in the context of hedging, speculation and arbitrage. The study determined that the evolution of financial derivatives was driven by the need to adapt to constantly changing market conditions, especially during crises and periods of volatility. The study also addressed the impact of financial technologies (fintech) and blockchain technologies on the derivatives market, emphasising the importance of automation and increased transparency of transactions. As noted, the derivatives market had undergone significant changes due to the introduction of new technologies that had improved the availability and speed of trading. Particular attention was devoted to the analysis of the Ukrainian derivatives market, where economic and political instability creates a need for effective risk management. A separate element of the study was the development of a model for the effective use of financial derivatives for risk management based on the example of Kernel. The model included the stages of risk assessment, selection of appropriate financial instruments, as well as monitoring and adjustment of strategies. The findings of the study emphasize that the derivatives market in Ukraine is still in the development stage, which is due to the limited understanding of these instruments among market participants
Authors: Hanna Tkachuk, Igor Burachek, Volodymyr Vyhovskyi, Anhelina Sotnyk, Iryna Tsaruk
Institution: Zhytomyr Polytechnic State University
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4406772601