The Financialization of Commodity Markets
36 Pages Posted: 6 Nov 2013 Last revised: 16 Nov 2013
Date Written: October 1, 2013
The large inflow of investment capital to commodity futures markets in the last decade has generated a heated debate about whether financialization distorts commodity prices. Rather than focusing on the opposing views concerning whether investment flows either did or did not cause a price bubble, we critically review academic studies through the perspective of how financial investors affect risk sharing and information discovery in commodity markets. We argue that financialization has substantially changed commodity markets through these mechanisms.
Keywords: futures speculation, financialization, hedging, oil prices, risk sharing, information discovery
JEL Classification: G10, G12, G13, G14, G20, E44
Suggested Citation: Suggested Citation