Development of China’s Derivatives Market: a Review of Studies
DOI:
https://doi.org/10.54691/bcpbm.v44i.4815Keywords:
derivative; China; financial markets; finance.Abstract
Under the background of globalization and financial innovation, the derivative markets in China have excellent growth potential as China is accelerating its transition towards a market economy, making it a valuable object for studies in financial derivatives. However, the market is still in its infancy. Relevant research focusing on China’s derivative market is relatively scarce and fragmented compared to those focusing on the developed economy. This paper intends to encourage more scholars to examine the Chinese derivative market and its characteristics by offering a review of the studies on China’s derivative markets, providing forward-looking opinions and direction of future research. The conclusion is as follows: (1) More research focusing on the period of crisis-like event needs to be done since they provide a basis to test the stability of China’s derivative markets; (2) the impact of derivative regulation in China should be carefully considered as the opinion of current research remain divided on this subject; (3) Future research should also focus on comparative analysis of market traits and linkage between China and other developed economies since the Chinese mainland market is adjusting to conform the international standard.
Downloads
References
1.JIA R-L, WANG D-H, TU J-Q, et al. Correlation between agricultural markets in dynamic perspective—evidence from China and the US Futures Markets[J]. Physica A: Statistical Mechanics and its Applications, 2016, 464: 83–92.
LI C, HAYES D J. Price discovery on the International Soybean Futures Markets: A threshold co-integration approach[J]. Journal of Futures Markets, 2016, 37(1): 52–70.
YANG J, ZHOU Y. Return and volatility transmission between China's and International Crude Oil Futures Markets: A first look[J]. Journal of Futures Markets, 2020, 40(6): 860–884.
LI J, HUANG L, LI P, et al. Are Chinese crude oil futures good hedging tools?[J]. Finance Research Letters, 2021, 38: 101514.
PING L, ZIYI Z, TIANNA Y, et al. The relationship among China’s fuel oil spot, Futures and Stock Markets[J]. Finance Research Letters, 2018, 24: 151–162.
CHEN X, TONGURAI J. Informational linkage and price discovery between China's futures and spot markets: Evidence from the US–china trade dispute[J]. Global Finance Journal, 2022: 100750.
XIE S, HUANG J. The impact of index futures on spot market volatility in China[J]. Emerging Markets Finance and Trade, 2014, 50(sup1): 167–177.
WANG D, TU J, CHANG X, et al. The lead–lag relationship between the spot and futures markets in China[J]. Quantitative Finance, 2017, 17(9): 1447–1456.
YUE T, ZHANG J E, TAN E K M, et al. The chinese equity index options market[J]. Emerging Markets Review, 2020, 45: 100742.
LI X, ZHOU C, HUANG W, et al. Delta-hedged gains of SSE 50 ETF options[J]. Applied Economics Letters, 2021, 29(20): 1864–1867.
LI J, YAO Y, CHEN Y, et al. Option prices and stock market momentum: Evidence from China[J]. Quantitative Finance, 2018, 18(9): 1517–1529.
ARKORFUL G B, CHEN H, LIU X, et al. The impact of options introduction on the volatility of the underlying equities: Evidence from the Chinese stock markets[J]. Quantitative Finance, 2020, 20(12): 2015–2024.
BRYAN P D, YANG T C, WANG L, et al. An update on China's derivatives market[J]. The Journal of Structured Finance, 2008, 13(4): 49–59.
HSIAO M W H. OTC Derivatives Regulation in China: How Far Across the River?[J]. Journal of Banking and Finance Law and Practice, 2017.
HU G X, WANG J. A Review of China’s Financial Markets[J]. Annu. Rev. Financ. Econ. 14. In press, 2022.
JACKSON J K, MILLER R S. Comparing G-20 Reform of the Over-the- Counter Derivatives Markets[J]. Congressional Research Service, 2013.
ZHENG H L, TAN Y H, WANG X X. Construction and Regulation of Trade Repository[J]. China Finance ,2022(16):89-90. (In Chinese)
REICHERT A, SHYU Y-W. Derivative activities and the risk of international banks: A market index and VAR approach[J]. International Review of Financial Analysis, 2003, 12(5): 489–511.
SHAN S C, TANG D Y, YAN H, et al. Credit default swaps and bank risk taking[J]. SSRN Electronic Journal, 2014.
SI W. The use of derivatives and bank risk taking in China[J]. SSRN Electronic Journal, 2014.
FU D, CHEN W, YANG M. Regulator Practice, Systemic Changes, and Enlightenment in Global Derivative Market[J]. Securities Market Herald, 2016. (In Chinese)
ZHANG L. The Chinese path of financial derivatives regulatory legislation: Based on a comparative research[J]. Journal of Education, Humanities and Social Sciences, 2022, 1: 189–194.
GAO S. Legal Pluralism and Isomorphism in Global Financial Regulation: The Case of OTC Derivative Counterparty Risk Regulation in China[J]. 51 GEO. Wash. INT'l L. REV. 145, 2019.
TATA F. Regulation, economies of scale and Credit Ratings: A puzzle of declining market concentration in the OTC derivatives market[J]. Finance Research Letters, 2019, 29: 292–296.
Downloads
Published
Issue
Section
How to Cite
