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When Corporate Risk Management Amplifies Risks: Evidence from Europe’s Energy Crisis in 2022
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DOI：10.1016/j.jbankfin.2026.107700.png)
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Abstract
En 中文
Derivatives are important risk management tools for hedging price risks but can expose firms to the risk of margin calls in times of market stress. This study investigates the impact of large margin calls on companies' financial outcomes. We document that most companies meet surging collateral requirements through borrowing, but firms without preexisting relationships with lenders resort to asset sales. Importantly, we show that margin calls have significant negative consequences for companies’ default risk, cost of debt, and profit margins, and some of these effects persist for more than a year after the margin calls. Our evidence derives from the European energy crisis in 2022, when energy corporations had to deposit significant amounts of cash to cover margin calls related to commodity hedges. However, the results may be generalized to other markets and highlight the need for corporate risk management to consider margin and liquidity risks tied to derivatives use.
Keywords:
derivatives
margin calls
risk management
financial outcomes
liquidity risk
Journal
J
IF:
3.8
Papers:
65
Citations:
0
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