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Importance of forward contracts in the financial crisis

Author

Listed:
  • Marina Djenic

    (Faculty of Economics, Finance and Administration, Teaching Assistant)

  • Snezana Popovcic-Avric

    (Faculty of Economics,Finance and Administration, Professor)

  • Lidija Barjaktarovic

    (Faculty of Economics, Finance and Administration, Assistant Professor)

Abstract

This research paper focuses on the level of development of the forward market in Serbia and examines the presence and advancement of use of forward contracts. Despite a de facto present volatility, the economy does not use this hedging instrument frequently. The research starts from the analysis of the legal framework that refers to the implementation of forward contracts, followed by the analysis of the level of development of the forward market, endeavouring to find the answer to the question why local companies have not yet clearly understood their own benefits from the use of this instrument in their day-to-day operations. The research is aimed to examine the use of forward contracts in Serbia, as well as the key economic and legal issues which are relevant for their successful implementation.

Suggested Citation

  • Marina Djenic & Snezana Popovcic-Avric & Lidija Barjaktarovic, 2012. "Importance of forward contracts in the financial crisis," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 1(2), pages 75-96.
    • Handle: RePEc:cbk:journl:v:1:y:2012:i:2:p:75-96
    as

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    File URL: http://www.cbcg.me/repec/cbk/journl/vol1no2-4.pdf
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    References listed on IDEAS

    as
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    2. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    3. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934, Elsevier.
    4. Kemal Kozarić & Nikola Fabris, 2012. "Monetary policy at crisis times," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 1(1), pages 5-24.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    forward contracts; forward markets; hedging; foreign exchange rate; foreign exchange risk;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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