Joost M.E. Pennings
Department of Agricultural and Consumer Economics
The University of Illinois at Urbana-Champaign
M.T.G. Meulenberg
Department of Marketing and Marketing Research
Wageningen Universi
Abstract
With a constant new stream of financial services coming to the market,
each often more exotic and complicated than the last, the financial services
industry, which includes commodity derivatives exchanges, brokerage houses
and banks providing price risk reduction services (the so-called hedging
services), is one of the fastest growing industries. In order to assure
survival, these companies show a rapid product innovation. However, for
commodity derivatives the risk of failure is considerable. This paper presents
a new and integrative approach towards commodity derivatives management,
which makes it easier to gain insight into the viability of new commodity
derivatives before introduction, to assess and improve the viability of
existing commodity derivatives and to provide the managers of the financial
services industry with information about the tools they can use in the
product development process of commodity derivatives.