Development of China’s Derivatives Market: a Review of Studies

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.