An Empirical Study On The Herding Effect In My Country’s Oill Futures Market

In recent years,the development speed of my country’s oil and fat futures market has been increasing rapidly,and the number of investors and contract transaction amounts have increased significantly.And according to the latest statistics,my country’s oil futures market,which is composed of soybean oil,rapeseed oil and palm oil,has been in the forefront of the world’s agricultural futures trading volume for many consecutive years,which shows that the scale of my country’s oil futures market continues to grow.The impact of its development on the entire agricultural futures market in my country should not be underestimated.The herd effect is a classic theory in the field of behavioral finance.The theory of herd effect shows that investors in the market will have irrational behaviors such as following the trend,and this behavior will have a certain negative impact on the interests of investors and the operation of the overall market.The purpose of this paper is to test whether there is a herd effect in my country’s oil futures market.The reason for choosing the oil futures market is that the activity of my country’s oil futures market is increasing,and the demand for oil spot market is also growing rapidly.The herding effect research on the futures market is helpful to further understand the operation of the market.Second,there are few literatures on my country’s oil futures market from the perspective of behavioral finance,and related research needs to be supplemented.Based on the above research background and research purpose,this paper firstly introduces the basic operation of my country’s oil futures market and the relevant theories and research methods of the herd effect.Then,according to the data provided by Zhengzhou Commodity Exchange and Dalian Commodity Exchange,the daily trading data of soybean oil futures,rapeseed oil futures and palm oil futures from January 2014 to December 2021 were collected and sorted out,and the data were sorted according to the largest trading volume.In principle,the main contracts are screened out,and finally their closing prices and trading volumes are collected as data support for this article.In order to detect whether there is a herd effect in my country’s oil futures market,this paper selects the cross-sectional return absolute difference(CSAD)model,which is the most commonly used method to detect the herd effect at home and abroad.According to the research conclusions of domestic and foreign scholars,the herd effect is different in different market stages.Therefore,this paper divides the oil futures market into an upward market,a downward market and a special period market for research.The data are first classified and calculated,and then the CSAD models of the three markets are constructed and tested for stationarity and regression analysis.The final empirical test results show that there is no significant herd effect in my country’s oil futures market in the three markets.This result shows that my country’s oil futures market is operating relatively well,and the investment behavior of market participants is also more rational.Combined with the results of empirical analysis,this paper also analyzes the current situation that there is no herd effect in the oil futures market.The main reason is that the construction of my country’s futures market is constantly on the right track,the risk warning mechanism within the futures market is also constantly improving,and the particularity of the oil futures market itself.Finally,although my country’s oil futures market does not have a herd effect during the research period,this does not guarantee that the market will not have a herd effect in the future development process.In this regard,this article also puts forward some specific suggestions to prevent the herd effect from four aspects: increasing the proportion of institutions,improving information disclosure,strengthening education and promotion,and adding oil and fat varieties according to the specific situation of the market,in order to hope for the oil futures market.It provides a good investment environment for investors,so as to maintain the stable development of my country’s oil futures market.