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Financialization of commodity markets: New evidence from temporal and spatial domains

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  • Libo Yin
  • Hong Cao

Abstract

To address the ongoing contention surrounding the impact of financialization, this study adopts a ripple‐spreading network model to analyze the transmission of information across 13 globally significant commodity markets. By juxtaposing the pre‐ and postfinancialization periods, notable disparities in spillover magnitude are discerned, with overall effects registering at 58% and 85%, respectively. Moreover, the postfinancialization period exhibits accelerated spillover dynamics, necessitating a reduced timeframe (less than 1000 units) in contrast to the prefinancialization period (approximately 2000 units). Furthermore, a heightened interconnectedness among energy, metal, and agricultural futures is evident in the postfinancialization period. These findings furnish compelling evidence regarding the ramifications of financialization on commodity markets.

Suggested Citation

  • Libo Yin & Hong Cao, 2024. "Financialization of commodity markets: New evidence from temporal and spatial domains," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 44(8), pages 1357-1382, August.
    • Handle: RePEc:wly:jfutmk:v:44:y:2024:i:8:p:1357-1382
    DOI: 10.1002/fut.22514
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