Does it Matter Who Trades Energy Derivatives?

Abstract:     
In the past decade, financial institutions have assumed an ever greater role in energy derivatives (or “paper”) markets. Numerous recent studies provide novel evidence of this “financialization” and analyze the extent to which it helps explain an important aspect of the distribution of energy returns. In this paper, we summarize their findings, identify some questions that remain unanswered, and discuss what data or theoretical breakthroughs could shed light on those issues.

Number of Pages in PDF File: 7

Keywords: Financial Institutions, Energy Derivatives, Speculation, Financialization, Cross-Market Linkages

JEL Classification: G10, G12, G13, G23

Accepted Paper Series