Financialization of Commodity Markets
Posted: 25 Nov 2014
Date Written: December 2014
Abstract
The large inflow of investment capital to commodity futures markets in the past decade has generated a heated debate about whether financialization distorts commodity prices. Rather than focusing on the opposing views concerning whether investment flows caused 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.
Suggested Citation: Suggested Citation
Cheng, Ing-Haw and Xiong, Wei, Financialization of Commodity Markets (December 2014). Annual Review of Financial Economics, Vol. 6, pp. 419-441, 2014, Available at SSRN: https://ssrn.com/abstract=2530469 or http://dx.doi.org/10.1146/annurev-financial-110613-034432
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