Title
Risk Issues on Banking Industry in Taiwan and Mainland China: The Determinants of the Use of Derivatives The Sensitivity of Stoc,Used
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The global financial crisis of September 2008 highlighted the importance of financial stability, financial soundness, and currency stability. This dissertation contributes to the literature in these areas with two studies. The first essay examines the financial characteristics of banks that use derivatives and those that do not, as well as the relationship between the use of derivatives and financial characteristics using quarterly data from all domestic banks from March 1998 to March 2009. The second essay estimates the sensitivity of stock returns to market, interest and exchange rate risks of the Chinese and Taiwanese financial institutions, and it also examines the pricing of these risk factors in the framework of Ross' (1976) arbitrage pricing theory. The twostep estimation procedure adopts a seemingly unrelated regression method using daily data for the period from 21 July 2005 to 31 December 2009. Finally, the implications of these findings for regulators, industrialists and academicians are provided in this dissertation.
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