This study examines the role of financial derivatives in managing operational and financial risks within China's chemical manufacturing sector. While prior research has primarily focused on financial determinants of hedging decisions, we highlight the significant influence of operational metrics—particularly inventory levels and turnover rates—in shaping firms’ engagement in derivatives markets. Drawing from a sample of 289 publicly listed chemical firms from 2016 to 2022, we employ probit regression and K-means clustering to explore how operational and financial factors jointly determine derivatives adoption. Our empirical results reveal that operational metrics have a non-negligible impact on hedging decisions. Specifically, inventory and turnover rates emerge as primary determinants of firms' initiatives, while pre-tax operating profit remains significant from a financial perspective. The moderation analysis of cash flow reveals that financially constrained firms prioritize derivatives for operational risk mitigation, while resource-abundant firms employ them selectively for strategic optimization. Furthermore, our robustness tests, which control for geographical distinctions and the COVID-19 effect, confirm that firm-specific operational characteristics consistently dominate firms' hedging decisions despite regional heterogeneity. Finally, clustering analysis underscores the interplay between operational efficiency and capital robustness, showing that firms exhibiting superior operational efficiency and capital robustness demonstrate higher engagement in derivatives hedging. These findings contribute to the corporate risk management literature by expounding on the primacy of operational considerations in derivatives usage, particularly in asset-intensive industries. The study also provides practical implications for manufacturing firms navigating volatile market conditions, emphasizing that integrating operational and financial strategies is crucial for effective risk management.

In the face of severe climate change, researchers have looked for assistance from financial instruments. They have examined how to hedge the risks of these instruments created by market fluctuations through various green financial derivatives, including green bonds (i.e., fixed-income financial instruments designed to support an environmental goal). In this study, we designed a green bond index option contract. First, we combined an autoregressive moving-average model (AMRA) with a generalized autoregressive conditional heteroskedasticity model (GARCH) to predict the green bond index. Next, we established a fractional Brownian motion option pricing model with temporally variable volatility. We used this approach to predict the closing price of the China Bond–Green Bond Index from 3 January 2017 to 30 December 2021 as an empirical analysis. The trend of the index predicted by the ARMA–GARCH model was consistent with the actual trend and predictions of actual prices were highly accurate. The modified fractional Brownian motion option pricing model improved the pricing accuracy. Our results provide a policy reference for the development of a green financial derivatives market, and can accelerate the transformation of markets towards a more sustainable economic development model.

Interest rate liberalization in China intensifies the exposure of commercial banks' interest rate risks and further increases the difficulty for commercial banks to effectively control interest rate risks, thus putting forward higher requirements for the normal operation and management of commercial banks. With the development of China's financial derivatives market, banking institutions begin to use basic interest rate derivatives to hedge interest rate risks. It is very important to give full play to the maturity transformation Function of commercial banks to enhance the ability of financial services to the real economy. Based on the semi annual unbalanced panel data of 37 listed banks in A-share stock markets from 2006 to 2020, this paper empirically tests the impact of the use of off balance sheet interest rate derivatives on the Maturity Transformation Function of banks in the case of interest rate fluctuations. The empirical results show that: (1) the use of interest rate derivatives helps to weaken the negative impact of interest rate fluctuations on the Maturity Transformation Function of banks. (2) The analysis of the mechanism shows that the use of interest rate derivatives improves the stability of the bank's asset side term structure and liability side term structure, so as to support the effective play of the bank's financial intermediary role. (3) Further analysis shows that the of interest rate derivatives significantly reduces the volatility of bank earnings. This study makes it clear that the use of interest rate derivatives has a positive impact on the commercial banks, which provides evidence for the further development of interest rate derivatives market in China.

中文摘要： 随着我国与世界各国经济往来的日益密切和国际金融的不断泛化，我国将逐渐融入国际金融市场的大环境。一些原本不为我们所熟识的金融衍生产品将逐渐影响并改变我们的经济生活。外汇按金交易作为80年代全球金融创新年代的新锐产品，首当其冲受到业内人士的普遍关注。随着中国外汇管理政策改革的进一步深化，推出衍生品交易时机已经成熟，按金交易也将应运而生。 English Abstract: With the closer relationship between China and foreign countries in the world and the further development of the international financial business, China will be gradually involved in the international financial market on a wide range. Some of the financial derivatives that we were not familiar with are going to make great influence and bring a lot changes in our economic life. As the new and great product in the world financial innovation activities, The Leveraged Foreign Exchange without no doubt will be the focus of the professional people in the banking industry and financial regulating sectors. Since the rules of the SAFE have changed a lot, the right time for the entering into foreign exchange market of financial derivatives becomes available. Thus, it is possible to remove the prohibition of The leveraged Foreign Exchange.