Effect of Commodity Exchange on the Economy- Prospects and Challenges

Md Nazmul Huda, Sayed Mohammad Athar Hossain and Jakhongir Shaturaev

MPRA Paper from University Library of Munich, Germany

Abstract: Commodity exchanges can play an important role in market development by increasing efficiency, reducing transaction costs, and providing price risk management tools. However, establishing and operating a successful commodity exchange in a developing country can be challenging. The key challenges include: small market size and lack of liquidity, weak infrastructure, lack of legal and regulatory support, lack of awareness and understanding of commodity exchanges among market participants, and government interventions that can distort market prices. Policy interventions that can be used to address these challenges and promote the development of successful commodity exchanges in developing countries include: providing financial support, developing the necessary infrastructure, creating a legal and regulatory framework, and raising awareness of commodity exchanges among market participants.

Keywords: Commodity exchange; financial market; stock market; securities and exchange commission (search for similar items in EconPapers)
JEL-codes: K0 M0 M00 O1 O16 (search for similar items in EconPapers)
Date: 2023-03-01, Revised 2023-03-14
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Published in Portfolio 29.1(2023): pp. 27-44

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:118331

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