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It is well established that financial development and innovation promote economic growth through improving the allocation of capital, enhancing risk management, contributing to price discovery, and increasing market efficiencies. While a vast empirical literature is devoted to the nexus between financial development and economic growth, however, substantially less research has been done on the relationship between derivatives and growth, especially in the emerging-market context. Derivatives can be viewed as a specific category of financial innovation, which may advance economic growth through its specialised functions of risk management and price discovery. This paper contributes to bridging this gap in the literature by exploring the impact of exchange-traded futures derivatives on South African economic growth, output, and economic growth volatility. It employs ARDL bounds tests, Granger causality tests and GARCH volatility modeling to analyse the effects of exchange-traded futures derivatives on various measures of South African economic activity. The main result is that exchange-traded futures derivatives contribute positively to South African economic growth and economic activity. This may suggest that opportunities might exist in other emerging economies, with financial structures comparable to that of South Africa, to encourage the development of organised and well-regulated derivatives markets to unlock economic growth in these economies. [ABSTRACT FROM AUTHOR]

This study investigated the interplay between exchange rate volatility, inflation rates, and real interest rates on Zambia's economic growth from 1992 to 2022, utilizing annualized time series data. The study was necessitated by the limited published literature and relatively varying findings on the variables' relationships in resource-dependent countries, such as Zambia. Diagnostic tests, including stationarity and co-integration analyses, were employed to determine integration orders and potential long-run relationships. The linear and nonlinear autoregressive distributed lag models were employed to assess short- and long-run dynamics of the variables on economic growth. The results established a positive short-run relationship between inflation rates and Gross Domestic Product (GDP) growth in the linear autoregressive distributive lag model, while an inverse relationship was observed in the nonlinear autoregressive distributive lag model, suggesting that negative shocks in inflation rates had a highly significant positive impact on economic growth. Furthermore, interest rates exhibited a positive relationship with economic growth, further suggesting that positive shocks had a greater significant direct effect on economic growth in comparison to negative shocks in the short and long run, respectively. Finally, exchange rates in both models exhibited an inverse relationship with economic growth irrespective of positive or negative shocks in the long run, highlighting the adverse effect of exchange rate volatility on economic growth prospects in developing countries, such as Zambia. The speed of adjustment to convergence following any disruptions was determined to be 75.18% (ARDL) and 89.19% (NARDL), highlighting relatively fast speeds of adjustments from any short-run disruptions. Notably, some of the policy recommendations included regular assessments of exchange rate volatility influences on import prices, domestic inflation, and production costs in key sectors. Additionally, the implementation of currency hedging options and forwards as well as bulking of foreign exchange reserves will ensure the stability of exchange rates against other major currencies in various economic conditions. [ABSTRACT FROM AUTHOR]

It is well established that financial development and innovation promote economic growth through improving the allocation of capital, enhancing risk management, contributing to price discovery, and increasing market efficiencies. While a vast empirical literature is devoted to the nexus between financial development and economic growth, however, substantially less research has been done on the relationship between derivatives and growth, especially in the emerging-market context. Derivatives can be viewed as a specific category of financial innovation, which may advance economic growth through its specialised functions of risk management and price discovery. This paper contributes to bridging this gap in the literature by exploring the impact of exchange-traded futures derivatives on South African economic growth, output, and economic growth volatility. It employs ARDL bounds tests, Granger causality tests and GARCH volatility modeling to analyse the effects of exchange-traded futures derivatives on various measures of South African economic activity. The main result is that exchange-traded futures derivatives contribute positively to South African economic growth and economic activity. This may suggest that opportunities might exist in other emerging economies, with financial structures comparable to that of South Africa, to encourage the development of organised and well-regulated derivatives markets to unlock economic growth in these economies.

This study investigated the interplay between exchange rate volatility, inflation rates, and real interest rates on Zambia’s economic growth from 1992 to 2022, utilizing annualized time series data. The study was necessitated by the limited published literature and relatively varying findings on the variables’ relationships in resource-dependent countries, such as Zambia. Diagnostic tests, including stationarity and co-integration analyses, were employed to determine integration orders and potential long-run relationships. The linear and nonlinear autoregressive distributed lag models were employed to assess short- and long-run dynamics of the variables on economic growth. The results established a positive short-run relationship between inflation rates and Gross Domestic Product (GDP) growth in the linear autoregressive distributive lag model, while an inverse relationship was observed in the nonlinear autoregressive distributive lag model, suggesting that negative shocks in inflation rates had a highly significant positive impact on economic growth. Furthermore, interest rates exhibited a positive relationship with economic growth, further suggesting that positive shocks had a greater significant direct effect on economic growth in comparison to negative shocks in the short and long run, respectively. Finally, exchange rates in both models exhibited an inverse relationship with economic growth irrespective of positive or negative shocks in the long run, highlighting the adverse effect of exchange rate volatility on economic growth prospects in developing countries, such as Zambia. The speed of adjustment to convergence following any disruptions was determined to be 75.18% (ARDL) and 89.19% (NARDL), highlighting relatively fast speeds of adjustments from any short-run disruptions. Notably, some of the policy recommendations included regular assessments of exchange rate volatility influences on import prices, domestic inflation, and production costs in key sectors. Additionally, the implementation of currency hedging options and forwards as well as bulking of foreign exchange reserves will ensure the stability of exchange rates against other major currencies in various economic conditions.

A vast number of the energy-growth nexus researchers, as well as other “X-variable-growth nexus” studies, such as for example the tourism-growth nexus, the environment-growth nexus or the food-growth nexus have used the autoregressive distributed lag model (ARDL) bounds test approach for cointegration testing. Their research papers rarely include all the ARDL procedure steps in a detailed way and thus they leave other researchers confused with the series of steps that must be followed and the best implementation paradigms so that they not allow any obscure aspects. This paper is a comprehensive review that suggests the steps that need to be taken before the ARDL procedure takes place as well as the steps that should be taken afterward with respect to causality investigation and robust analysis.

A vast number of the energy-growth nexus researchers, as well as other "X-variable-growth nexus" studies, such as for example the tourism-growth nexus, the environment-growth nexus or the food-growth nexus have used the autoregressive distributed lag model (ARDL) bounds test approach for cointegration testing. Their research papers rarely include all the ARDL procedure steps in a detailed way and thus they leave other researchers confused with the series of steps that must be followed and the best implementation paradigms so that they not allow any obscure aspects. This paper is a comprehensive review that suggests the steps that need to be taken before the ARDL procedure takes place as well as the steps that should be taken afterward with respect to causality investigation and robust analysis. [ABSTRACT FROM AUTHOR]