Trading in Commodity Exchange and Challenges of Participants: The Case of Ethiopian Commodity Exchange
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Date
2011-06
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Addis Ababa University
Abstract
The Ethiopian Commodity Exchange was established to revolutionize Ethiopian agriculture and transform the economy through a dynamic, efficient and transparent marketing system. Properly implemented and regulated, commodity exchanges can contribute greatly to the achievement of a country’s economic and developmental goals and strengthen the bargaining power of participants. Hence the overall objective of this study is to assess the trading practices and identify the challenges of participants of the Ethiopian commodity exchange. And the variables that were assessed and identified were trading practice, warehouse and quality grading, liquidity and market information system. A survey questionnaires and interviews were prepared to collect a primary data, secondary data from the books and documents of the ECX and other sources were also used to augment the primary data. The data was collected from a sample of 80 Ethiopian commodity exchange participants or members selected through random sampling. And the survey was collected through cross-sectional survey. And the data was analyzed through descriptive analysis and binary regression model by using of SPSS version 16.The result shows Ethiopian commodity exchange was practicing an open outcry trading system and spot contract. The binary regression model result verified that time of participation, limited membership seat, membership seat fee and occupation was found to be highly significant with the choice of membership category. Apart from this according to the descriptive analysis lack of adequate warehouses, grading and sampling system, higher penalty cost for not withdrawing commodities from the warehouses on time, availability of in store credit, higher membership seat fee and transaction cost, were found to be some of constraints that hinder participants from the smooth functioning of transactions in the exchange.
Key words: ECX, ECX participants
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Keywords
ECX, ECX participants