The Importance of Integrating Quantitative Research Methods to Understand Commodity Business Finance

Zavadska, Miroslava; Morales, Lucía; Coughlan, Joseph; Morales, Lucía; Coughlan, Joseph

THE IMPORTANCE OF INTEGRATING QUANTITATIVE RESEARCH METHODS TO UNDERSTAND COMMODITY BUSINESS FINANCE

MIROSLAVA ZAVADSKA, LUCÍA MORALES, JOSEPH COUGHLAN, LUCÍA MORALES, JOSEPH COUGHLAN

Abstract:

There is significant array of quantitative methods used to analyse the basic properties and behaviour of commodity markets. This study focuses on how integrating these methods can aid our understanding of how crude oil markets behave during major shock events that exhibit high levels of uncertainty and risk exposure to businesses that rely on commodities to function. The study considers the relationship and behaviour of spot prices of major oil benchmarks: Brent crude oil (the European crude oil benchmark), the West Texas Intermediate (the US benchmark) and the Dubai crude oil (the Middle East benchmark). The research framework under consideration can bring value to businesses, and practitioners, as it offers opportunities to identify, and measure, how oil prices variations impact on the costs of business operations. A clearer understanding of oil price dynamics aids the decision maker with complex decisions such as strategic investment and sourcing of raw materials. These issues can be quantified and then integrated into operational plans, and hedging strategies can be implemented to minimise risk exposure to oil market fluctuations. Through the implementation of an integrated battery of research methodologies commonly used to model oil prices, this paper contributes towards the operationalisation of econometric modelling in business. This study considers that markets are not as predictable as it was once thought, and decisions are, in reality, made based on how we, as humans, think and engage with the organisational environment. Financial models and theories can offer support to practitioners when measuring cost implications for their businesses.

Keywords:
Business finance, Multi method research, Commodity, Energy, Shock periods, Cointegration, Causality, Volatility, Efficiency, Decision-making.

DOI: 10.20472/BM.2018.6.1.005

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APA citation:
MIROSLAVA ZAVADSKA, LUCÍA MORALES, JOSEPH COUGHLAN, LUCÍA MORALES, JOSEPH COUGHLAN (2018). The Importance of Integrating Quantitative Research Methods to Understand Commodity Business Finance. International Journal of Business and Management, Vol. VI(1), pp. 54-77. , DOI: 10.20472/BM.2018.6.1.005