The Effect of Market Efficiency of ECX on Coffee Export Performancein Ethiopia

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Addis Ababa University


This study intended to assess efficiency of Ethiopian CommodityExchange to coffee export performance in Ethiopia. The study used the variables risk management, price discovery, transaction cost and market integrity to measure market efficiency of ECX. The unique nature of this study from previous studies on efficiency of ECX is that the study tried to see efficiency from different angles using several measuring variables. Different literatures were reviewed to see previous study opinions on efficiency of ECX. Primary method was used in order to collect data on the subject matter under study. Census research method was used to collect relevant data from respondents in the case of this study from coffee exporters.However, from 214 Ethiopian coffee exporters, the researcher could manage to distribute 195 questionnaires and only 101 useable questionnaires were collected and used for this research. In depth interview was made with eleven industry experts. Multiple regression equation was used to analyze data collected from respondents using 5 point Likert Scale questions. Frequency tables were used to analyze data related to respondent’s profile. Results from the multiple regression showed that risk management and transaction cost are found significant to explain market efficiency of ECX. However, price discovery and market integrity are found insignificant and are not good enough to explain efficiency of ECX. But allthe four variables can determine efficiency of ECX according to the data from the qualitative results. Risk management system offered by ECX to the market players means exporters will be protected from international price fluctuation and their exporter performance will increase. When a true price discovery of a commodity exists, exporters will be competitive in the international market and will able to sell their coffee in volume. When a commodity exchange reduces transaction cost by offering services at a lower cost, exporters profit margin will increase. And finally market integrity has same effect on coffee export performance by Ethiopian coffee exporters.



Coffee, Commodity Exchange, Risk Management