The Role of Derivatives Markets in Economic Growth

Author: Ran Hua
Publisher:
Publish Date: 2006-01-01
Features: The current derivatives market is largely still a tool for trading and speculation. The industry's understanding of the economic functions of derivatives markets generally remains at the level of price discovery and risk management. However, the role these functions play in economic growth is still lacking theoretical summary and refinement. Therefore, to develop and improve the derivatives market, theoretical breakthroughs and innovations are needed. This book makes a preliminary attempt in this regard. Based on a description of major historical debates in the derivatives market and a review of research literature from different periods, the book proposes the concept of the evolution of economic functions in derivatives markets. Through research based on traditional economic growth theory, the author points out that traditional economic growth theory is not applicable to developing countries and modern economies with highly developed virtual economies. Instead, the author proposes an economic growth theory model based on resource and risk allocation efficiency, and studies the role of the derivatives market in economic growth from the perspective of pricing mechanisms. Additionally, the author discusses the risk characteristics and risk transmission mechanisms of derivatives markets, conducting a relatively systematic study of regulatory theory, regulatory objectives, regulatory methods, and the selection of regulatory models for derivatives markets. Furthermore, the author argues for the necessity and feasibility of China developing derivatives markets, considering the country's current stage of a new emerging and transition period, from multiple perspectives such as the need to maintain national economic and financial security, the need for industrial competition in the post-industrial economy, and the need to promote agriculture's advancement to higher-value segments of the industrial chain.