Factors affecting the use of derivatives of companies that are traded in Istanbul Stock Exchange

This paper investigates the determinants of financial derivative use by Turkish firms. Using data from 150 non-financial firms, traded in Borsa Istanbul, factors affecting the use of financial derivatives are determined by employing Logit model. Our results are in line with related literature and show the positive impact of firm size on the use of derivatives. Additionally, to be included in BIST Corporate Governance Index and foreign partnership are also found to be effective factors on derivative hedging activities. Since the model is developed to analyze the determinants of derivative use by Turkish firms, it will provide a baseline for future related research. As the firms understand the importance of hedging with use of derivatives and its benefits and become more familiar with it, different parameters are expected to become effective on the use of derivatives which is relatively a new phenomenon for Turkey. Keywords: derivative use, risk management, BIST100