Abstract

https://ssrn.com/abstract=1990828
 
 

References (45)



 
 

Citations (6)



 


 



New Evidence on the Financialization of Commodity Markets


Brian J. Henderson


George Washington University - Department of Finance

Neil D. Pearson


University of Illinois at Urbana-Champaign - Department of Finance

Li Wang


Case Western Reserve University

November 18, 2014


Abstract:     
This paper uses a novel dataset of Commodity-Linked Notes (CLNs) to examine the impact of the flows of financial investors on commodity futures prices. Investor flows into and out of CLNs are passed to and withdrawn from the futures markets via issuers’ trades to hedge their CLN liabilities. The flows are not based on information about futures price movements, but nonetheless cause increases and decreases in commodity futures prices when they are passed through to and withdrawn from the futures markets. These findings are consistent with the hypothesis that non-information based financial investments have important impacts on commodity prices.

Number of Pages in PDF File: 44

Keywords: financialization, commodity-linked notes, commodity structured products, commodity index investors, commodity futures

JEL Classification: G13, G14, G18


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Date posted: January 25, 2012 ; Last revised: November 19, 2014

Suggested Citation

Henderson, Brian J. and Pearson, Neil D. and Wang, Li, New Evidence on the Financialization of Commodity Markets (November 18, 2014). Available at SSRN: https://ssrn.com/abstract=1990828 or http://dx.doi.org/10.2139/ssrn.1990828

Contact Information

Brian Joseph Henderson
George Washington University - Department of Finance ( email )
Department of Finance, Funger Hall
2201 G Street, NW
Washington, DC 20052
United States
202-994-3669 (Phone)
Neil D. Pearson (Contact Author)
University of Illinois at Urbana-Champaign - Department of Finance ( email )
1206 South Sixth Street
Champaign, IL 61820
United States
217-244-0490 (Phone)
217-244-9867 (Fax)
Li Wang
Case Western Reserve University ( email )
Weatherhead School of Management,
Case Western Reserve University
Cleveland, OH 44106
United States
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