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Why Financial Derivatives Markets in Malaysia Underperformed: Swot Analysis

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Why Financial Derivatives Markets in Malaysia Underperformed: Swot Analysis
Underperformance of Financial Derivatives Market in Malaysia: SWOT and TOWS Analysis

CHAPTER 1

INTRODUCTION

1. Introduction

In the age of globalization, a lot of corporations penetrate into global market, and on one hand penetration into new market have improved the corporation’s prosperity, and on the other it has also increased a range of financial market risks. Corporations face a variety of financial market risks, which in some cases can be controlled and some cannot be controlled. Corporations must be able to manage their risks either to maximising company value or maximising management efficacy. To remain competitive and rising awareness to manage these risks, corporations now focusing on risk management by financial derivatives products. The use of financial derivatives to hedge interest rate and foreign exchange exposure has become a commonplace nowadays.

In recent years, market deregulation, expansion in global trade, and progressing technological developments led to a consequent increase in demand for risk management products. This demand is reflected in the development of financial derivatives from the uniform futures and options products of the 1970s to the ample spectrum of over-the-counter (OTC) products accessible and sells today. Numerous products and instruments are frequently express as derivatives by the monetary press and market participants. In this management, financial derivatives are generally defined as instruments that mainly derive their value from the performance of an underlying asset or item, usually interest or foreign exchange rates, equity, or commodity prices.

Examples of financial derivatives consist of futures, swaps, options, structured debt obligations and forward rate agreements. Lately, credit derivatives have been used progressively more by financial institutions to moderate potential financial problems experienced as a result of the breakdown of borrowers to perform in terms of loan

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