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

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.