Investigating the effect of risk hedging strategies in the capital market and its effect on the willingness to invest (case study of the Fars Stock Exchange market)

To get a master's degree

MBA Management Department

Management Group

Abstract

There is a fixed principle in investment culture that capital is risk-averse and tends towards return and profit; It is for this reason that risk-averse investors refuse to invest their capital in a place where there is risk or there is an uncertain horizon against the profit and principal of their capital. The purpose of this research is to investigate the impact of risk hedging strategies in the capital market and its impact on the willingness to invest. In terms of method, this research is part of descriptive-survey research and in terms of purpose, it is also part of applied research. The statistical population of this research includes all the investors of Fars Stock Exchange, and the relevant sample size was estimated to be 385 people. A researcher-made questionnaire with 38 questions was used to collect data; Its reliability was confirmed by using Cronbach's alpha of 0.81 and its validity was also confirmed by using the opinion of respected professors and experts. The collected data will be analyzed through SPSS software. The results of the research indicated the confirmation of all research hypotheses (three main hypotheses and 14 sub-hypotheses) and suggestions were presented in this direction. Primary market risk, secondary market risk, non-financial risk, risk coverage, willingness to invest

Chapter 1

Research overview

1 Introduction

With the development of financial markets in the world, their importance and influence in all aspects of human civilization, including economy and politics, have increased day by day. Financial crises caused by securities risks or a type of financial instrument in one country can easily create chains of crises in a large range of countries. Such as the crisis caused by mortgage loans in America at the end of 2007, which faced many problems in the financial markets of the world. This issue has caused more attention and sensitivity towards the financial markets. In the Islamic world, in recent years, with the understanding of the need to develop markets and instruments based on Islamic Sharia, which are in accordance with Islamic principles, Islamic financial markets are developing and equipping at a very fast pace. Therefore, in this regard, an attempt is made to examine the risk factors in the aforementioned markets, and also to mention the method of covering them.

In this chapter, an attempt is made to first express the problem with a general view, and then by mentioning the importance of the issue, the type of research method is also mentioned in a general way, and the statistical population and statistical sample are also mentioned. They have been briefly mentioned so that the general chart of the research can be seen. 1-2 Statement of the problem There is a fixed principle in investment culture that capital is risk-averse and tends towards yield and profit. It is for this reason that risk-averse investors refuse to invest their capital in a place where there is risk or there is an uncertain horizon against the profit and principal of their capital. But is it possible to find a place where investment is not risky? The risk of losing capital is everywhere, some investments are high risk and some are low risk. According to the amount of risk and risk of investment, the investor has the expectation of proportional profit and return. Investors usually look for the appropriate return according to the relevant risk through their financial analysis. In a conventional market where market agents have information, high returns will always result in higher risk. This issue causes that investment decisions are always made based on the relationship between risk and return, and an investor always considers the two factors of risk and return in the analysis and management of his investment portfolio. In other words, investment as a financial decision has always had two components of risk and return, which offers the exchange of these two different investment combinations. On the one hand, investors seek to maximize their income from investment, and on the other hand, they are faced with the conditions of uncertainty governing the financial markets, which the latter factor makes the achievement of investment income uncertain (Abzari et al., 1386: 125).

Usually in the economy and especially in investment, it is assumed that investors act rationally.Rational investors prefer certainty to uncertainty, and it is natural that in this case it can be said that investors are not interested in risk, more precisely, they are risk-averse investors. A risk-averse investor is someone who expects to receive a good return in return for accepting the risk. It should be noted that in this case accepting risk is not an unreasonable task, even if the amount of risk is very high, because in this case there is also an expectation of high returns. In fact, investors cannot reasonably expect to earn high returns without accepting high risk. On the other hand, the conducted research indicates that people do not act logically and rationally in their decisions under risk conditions (Abzari et al., 1386: 126).

With the development of financial markets in the world, their importance and influence in all aspects of human civilization, including economy and politics, has increased day by day. Financial crises caused by securities risks or a type of financial instrument in a country can easily create chains of crises in a large range of countries; Like the crisis caused by mortgage loans in America in late 2007, which faced many problems in the financial markets of the world. This issue has caused more attention and sensitivity towards the financial markets. In the Islamic world, in recent years, with the understanding of the need to develop markets and tools based on Islamic Sharia, which are compatible with Islamic principles, Islamic financial markets are developing and equipping at a very fast pace (Qolizadeh et al., 2013).

Therefore, countries with an Islamic economy, including Iran, should seek to design new tools based on Islamic principles for financing or risk hedging. The risks caused by the ups and downs of the capital market have always caused concerns for investors and have led the world's capital markets to introduce risk management methods and have caused the formation of various institutions and tools to cover risk. 

1-3 Necessity and importance of research

Another branch of management that has gained an important position in the management system in recent decades is risk management. Although each of the managers works in a specific domain and area of ??expertise, the basic and common responsibility of all managers is to achieve the goals of the organization through the effective use of financial and human resources. Based on knowledge of macro environment, industry environment and knowledge of financial and human capabilities of their institution, senior managers examine different ways to achieve goals and choose the most suitable way or ways among them (Razmichael, 2001: 9). The chosen ways will guide the organization in the direction of achieving the goals if the necessary resources are provided and they are used efficiently and effectively, and such optimal use of resources and assets will only be possible if we protect them in an organized way against threatening risks (Black and Idelshin, 1997: 23). Risk management helps managers to adjust their operational and economic costs and helps them make the best decisions. to give A suitable method of risk management, if implemented well; It can help managers in identifying the appropriate control factors so that they can implement the necessary security in fulfilling the organization's mission, and as a result, it can guarantee the organization's survival and protect the organization from the risk of small and large risks (C. Arthur et al., 2013).

To explain the role of risk managers, it is necessary to pay attention to the fact that the good performance of the managers' duties depends on the effective use of financial and human resources, and the basic condition for the optimal use of resources is to protect assets against factors that It endangers their existence and efficiency. Factors that endanger the current and future status of assets, including people, tangible and intangible assets, as well as the company's income, are called risk (C. Arthur et al., 2012). But risk management is an important and fundamental challenge for many small and medium-sized companies. In contrast to larger companies, they often face a reduction in essential resources such as human resources, information and even knowledge necessary to implement the necessary standards for risk management. As a result, many small companies do not have important analyzes of risk or even the correct definition of risk for their organization. Also, the lack of resources about risk management methods in small and medium-sized companies has also become the reason (Hansel, 2008: 48).