Dublin Core
Title
THE EMPIRICAL EVALUATION OF THE ASSOCIATION BETWEEN DERIVATIVESMARKETS AND MARKET FACTORS IN ZIMBABWE AND BOTSWANA
Creator
WILBERT KUDAKWASHE CHIDAUSHE
TAVONGA NJAYA
Description
The study evaluated the association between financial markets and financial stability (as measured by bank
credits to deposits), financial efficiency (as measured by bank costs to income ratio), financial access (as
measured by bank accounts per 1000) and financial depth (as measured by bank deposits to GDP). A
Generalised Linear Model (GLM) was run from the year 2009 to the year 2021. The GLM revealed at 99% level
of confidence that, the financial markets are significantly and positively related to financial efficiency as
measured by bank costs to income ratio. It is further observed that financial markets with higher bank costs to
income ratio catalyses derivative usage. However, in contrast the financial markets were observed to have a
negative significant relationship with the other constructs used in the model at 99% level of confidence. The
results of the document review exposed the reason for non-use of derivatives as unique to each market relating
possibly to differences in economic, political, financial infrastructure, market infrastructure, legal and regulatory
and market timing. More so document analysis revealed that an evolving benefit of derivatives is enabling
channelling of capital to sustainable investments. It is recommended that promotion of financial efficiency in the
financial markets must be the main thrust of the policy makers through the establishment of properly functioning
derivative markets in Zimbabwe and Botswana. Further policy makers must implore the use of sustainability
linked derivatives (SLDs) in their markets as a vital option to allocate capital to environmentally friendly
investments
credits to deposits), financial efficiency (as measured by bank costs to income ratio), financial access (as
measured by bank accounts per 1000) and financial depth (as measured by bank deposits to GDP). A
Generalised Linear Model (GLM) was run from the year 2009 to the year 2021. The GLM revealed at 99% level
of confidence that, the financial markets are significantly and positively related to financial efficiency as
measured by bank costs to income ratio. It is further observed that financial markets with higher bank costs to
income ratio catalyses derivative usage. However, in contrast the financial markets were observed to have a
negative significant relationship with the other constructs used in the model at 99% level of confidence. The
results of the document review exposed the reason for non-use of derivatives as unique to each market relating
possibly to differences in economic, political, financial infrastructure, market infrastructure, legal and regulatory
and market timing. More so document analysis revealed that an evolving benefit of derivatives is enabling
channelling of capital to sustainable investments. It is recommended that promotion of financial efficiency in the
financial markets must be the main thrust of the policy makers through the establishment of properly functioning
derivative markets in Zimbabwe and Botswana. Further policy makers must implore the use of sustainability
linked derivatives (SLDs) in their markets as a vital option to allocate capital to environmentally friendly
investments
Publisher
Research Journal of Finance and Accounting
Date
2023
Position: 6 (71 views)