Empirical Research on Function and International Influence of Chinese Futures Market

Empirical Research on Function and International Influence of Chinese Futures Market


Author:Yishan Zhang, Yi Fang, Kun Huang Journal:Management World (Chinese)  Date:2006(4)

Keywords Futures market; price discovery; hedging; risk aversion

Abstract

This paper makes an empirical study on the main varieties of metal and agricultural products in our country, and analyzes the whole futures market comprehensively and systematically. Distinguished from the traditional literature, we make some differences in the price discovering and hedging function of the market according to economic principles. Granger causality analysis is used to investigate the market price discovery function. Error-correction model and co-integration test are absorbed to get hedging performance. In order to overcome the disadvantages of traditional unstructured equation, we use Structural Vector Autoregression, structural impulse response and variance decomposition to quantitatively describe the relations among domestic and foreign futures markets.The research shows that China's futures market has played a basic function, but there are still deep deficiencies in agricultural futures market. What's more, the international futures market has a one-way impact on the domestic futures market's price, and the latter has a lower efficiency than the former.


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