Navigating Adoption of Financial Derivatives: Dynamics of Complexity and Regulatory System

Ruva Tunze; Evelyn M. Richard; Eric Mkwizu

doi:10.18096/TMP.2025.02.05

Authors

Ruva Tunze University of Dar es Salaam https://orcid.org/0009-0007-0705-9020
Evelyn M. Richard University of Dar es Salaam https://orcid.org/0000-0003-4895-819X
Eric Mkwizu University of Dar es Salaam

DOI:

https://doi.org/10.18096/TMP.2025.02.05

Keywords:

Complexity, regulatory system, adoption intention, financial derivatives

Abstract

This study examines the intention of financial institutions to adopt financial derivatives in less developed markets. Integrating key innovation attributes, complexity and regulatory system as a moderator. The theoretical framework uses complexity theory and financial innovation theory to provide a robust explanation of adoption behaviour. Data were collected from 142 financial institutions in Tanzania. Using Structural Equation Modelling (SEM).

The results demonstrate that complexity and the responsive regulatory system significantly influence the intention to adopt financial derivatives, and the regulatory system significantly moderated the adverse effect of complexity. Theoretically, this study contributes to the financial innovation literature by integrating complexity theory in adoption models, offering empirical validation in a developing market context. These findings provide practical insights for derivative designers, financial educators, and regulatory authorities.

Author Biographies

Ruva Tunze, University of Dar es Salaam

PhD Student, Department of Finance, University of Dar es Salaam Business School

Evelyn M. Richard, University of Dar es Salaam

Senior Lecturer, Department of Finance, University of Dar es Salaam Business School

Eric Mkwizu, University of Dar es Salaam

Lecturer, Department of Finance, University of Dar es Salaam Business School

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