ABSTRACT
This study examines the impact of foreign currency and interest rate derivatives on the firm value of Sharī ͑ah-compliant firms in Malaysia. To meet its objective, the Generalized Method of Moments estimator (System-GMM) and the Two Stage Least Square (2SLS) approaches are employed for a set of panel data from 2000–2017 to examine the impact of both foreign currency and interest rate derivatives. This study concludes that there is a significant relationship between foreign currency derivatives on firm value. However, the relationship between interest rate derivatives and firm value is insignificant. The findings enrich the current Islamic financial market literature and contribute to a better understanding of the hedging activities. This study offers new evidence on risk management using derivatives in both foreign currency and interest rate derivatives.
