Using analytic hierarchy process to determine forex risk hedging strategies of SMEs.

The study aims to explore the determinants of hedging strategies to mitigate forex exposure risk for IndianSMEs and other unlisted firms which comes in the category of non-financial in nature. Further, these determinants are prioritized based on expert opinion. Basically, the current research is exploratory in nature. It is based on primary data. The analysis is done in two sections. The first part focuses on the extraction of factors explaining the determinants of a hedging strategy adopted to reduce forex risk. For this purpose, the basic technique called exploratory factor analysis (EFA) is applied. The second part has an applied analytic hierarchy process (AHP), which makes paired comparison of factors discovered through EFA and thus prioritizes the determinants based on expert decision making. The study has practical implications for SMEs, unlisted firms, forex risk advisors, and regulators too. The factors that make up a hedging strategy will help all of these groups make good decisions when making a hedging strategy and developingforex risk hedging instruments for small and medium-sized businesses (SMEs) and firms that are not publicly traded. The study is unique because no other research has looked into what makes SMEs and unlisted firms choose hedging strategies for forex risk exposure. [ABSTRACT FROM AUTHOR]