| Summary: | Given ongoing advocacy for the institutionalisation of derivatives trading in sub-
Saharan Africa (SSA) as a convenient way for enhancing regional countries’ growth
prospects, this study examines the impact of derivatives trading on the economy of
South Africa, with reference to output growth and growth volatility, in order to
illustrate the likely developmental impact that derivatives markets could ensue for
SSA countries. The literature of the study essentially explores the possible ways of
derivatives markets’ influence on economic growth, alongside the infrastructural
requirements for ensuring well-functioning derivatives markets. While accounting for
implied capital market development, the GMM estimation could not evidence a
significant relationship between the existing derivatives exchange and real GDP
growth using South Africa’s data. Similarly, a causal relationship from SAFEX’s
trading volumes to GDP growth could not be inferred. However, the study shows
evidence of the reducing effect of derivatives trading on growth volatility. === Business Management === M. Com. ( Business Management)
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