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The Role of Gold Market as Stabilizer of Service Industry

The Role of Gold Market as Stabilizer of Service Industry

Heliang Zhu, Xi Zhang, Patricia Ordenaz de Pablos
Copyright: © 2016 |Pages: 16
ISBN13: 9781466697584|ISBN10: 146669758X|EISBN13: 9781466697591
DOI: 10.4018/978-1-4666-9758-4.ch014
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MLA

Zhu, Heliang, et al. "The Role of Gold Market as Stabilizer of Service Industry." Managerial Strategies and Practice in the Asian Business Sector, edited by U Zeyar Myo Aung and Patricia Ordoñez de Pablos, IGI Global, 2016, pp. 267-282. https://doi.org/10.4018/978-1-4666-9758-4.ch014

APA

Zhu, H., Zhang, X., & Ordenaz de Pablos, P. (2016). The Role of Gold Market as Stabilizer of Service Industry. In U. Aung & P. Ordoñez de Pablos (Eds.), Managerial Strategies and Practice in the Asian Business Sector (pp. 267-282). IGI Global. https://doi.org/10.4018/978-1-4666-9758-4.ch014

Chicago

Zhu, Heliang, Xi Zhang, and Patricia Ordenaz de Pablos. "The Role of Gold Market as Stabilizer of Service Industry." In Managerial Strategies and Practice in the Asian Business Sector, edited by U Zeyar Myo Aung and Patricia Ordoñez de Pablos, 267-282. Hershey, PA: IGI Global, 2016. https://doi.org/10.4018/978-1-4666-9758-4.ch014

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Abstract

China's gold futures market has been in market for more than four years, is the risk transfer function fully realized? How the performance of hedging? Based on the data of futures prices and spot prices from January 9th of 2008 to December 31st of 2010, we use the following four statistical models such as traditional regression model (OLS), two-variable vector auto regression model (B-VAR), error correction hedging model (ECM), and error correction GARCH model (EC-GARCH) to perform stationarity and cointegration test On the basis of minimum risk hedge ratio estimated, the following conclusions are made based on the study: (1) As China's gold futures market has run for more than three years, hedge is effective through the gold futures market, which can significantly reduce the participants ‘ risk of price fluctuation; (2)In practice, hedging ratio should be rationally determined by different models according to different hedging length and different expectations. Based on these conclusions, this paper also made corresponding policy recommendations.

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