EFFECT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON TRADING PERFORMANCE: A CASE STUDY IN ETHIOPIA COMMODITY EXCHANGE

Abstract

The main objective of the study was to investigate the effect of information and communication technology on trading performance of Ethiopia Commodity Exchange. ECX Employees(140) and 128 traders who are selling and buying commodities using ECX trading platform had been selected using stratified random sampling technique. The study used both primary and secondary sources of data. The primary source of data was collected using self-designed questionnaire and structured interview. Secondary sources which include study papers, ECX historical documents, strategy documents, annual reports, sources from internet, and Extracted data from ECX database. Descriptive statistics and inferential statistics analysis had been used to describe relationships among independent and dependent variables. The data had been analysed using statistical software’s Statistical Package for the Social Sciences (SPSS). The dependent variable used in this study was trading performance which was described in this study by volume of traded commodities, trader’s satisfaction, Market price accessibility, clearing and settlement efficiency, warehouse and trading efficiency. The independent variables are Electronic trading Application (ETA), computer system (CS), Network System (NS) and Data base management system (DBMS). Correlation analysis of the data showed that there is significant positive correlation among the dependent and independent variable. Using regression analysis, it was found that 75.9 % of variation in trading performance was due to the independent variables. Other factors which were not mentioned with in this research had a share of 24.1%. The regression result showed that ETA, NS, CS and DBMS have positive significant effect on trading performance. Based on the research finding Information and communication technology services enhance the reliability accuracy and efficiency of clearing and settlement, warehouse and trading operations which are the three core functions of the exchange. In addition, the usage of ICT significantly Improve Market data accessibility, trading centres accessibility, Level of customer satisfaction and volume of traded and deposited data. Finally the researcher concluded that Ethiopia commodity exchange trading performance is significantly dependent on information and communication technology services and recommended that upgrade of technologies; enhancement of existing ICT infrastructure and application, identifications of system interruption factors, implementation of business continuity plan will improve the efficiency ,effectiveness ,scalability and quality of ICT services which in turn helps in improving the performance of trading.