Foreword by Bertrand Badre Preface Acknowledgements 1. Introduction 2. Definition and typology 3. The Economic functions of derivatives markets 4. Market completion 5. Derivatives and price stabilization 6. Derivatives and price destabilization 7. The effects of derivatives on prices of the underlying: A synthesis 8. Causes of the rapid growth in derivatives trading: A historical perspective 9. The role of derivatives in the global financial crisis of 2008 10. Models and their effects on markets 11. Derivatives and emerging markets 12. Derivatives and emerging markets 13. Regulation of derivatives 14. Derivatives and development: A critique 15. Regulatory policy for derivatives: A pragmatic approach Index

Derivative markets have grown spectacularly in size in recent decades. This book discusses the extent to which derivative markets perform socially useful economic functions. It also continues with specific reference to the issue of 'market completion', which some economists regard as an important function of derivative markets. There are two broad areas of economic derivatives – the financial stream which discusses how derivative markets work, and the economic stream which looks at the contributions of derivatives to overall economic well-being. This book deals with the economic stream. It examines both the beneficial and adverse effects of derivatives trading from economic theory, the perspectives of empirical evidence and also the recent economic history. Aiming to present the concepts in a non-mathematical and simple manner, and with the authors' own synthesis, it draws economic insights from relevant work in other disciplines, particularly sociology and law. The book also provides some new theoretical ideas and recommendations towards a pragmatic and practical approach for policy-makers. The ultimate objective is to provide a basic conceptual framework which will help its readers form a judgement on whether derivatives are beneficial or harmful to the economy.