Assessment of Derivative Instruments Usage on Risk Hedging by Nigerian Firms

Banking and Finance — 2025, Undergraduate

This study assessed the usage of derivative instruments for risk hedging by Nigerian firms. A descriptive survey was conducted with treasury and finance officers of selected companies using a structured questionnaire. Data were analysed using descriptive statistics and regression analysis. The findings revealed that a minority of firms actively used currency, interest rate, and commodity derivatives to hedge exposures, while most relied on operational hedging due to cost and knowledge constraints. The study found limited market depth and regulatory clarity hindered broad adoption. It recommends market development, capacity building, and improved awareness of derivative hedging.

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