Financialization of International Commodity Market and Its Effects ‒ Empirical Analysis Based on the BRIC Countries
Li Li*ABSTRACT. By constructing a set of new comprehensive indicators to measure the financialization of the international commodity market from the perspectives of speculation, currency, market links and risk, this paper explores the relationship between the financialization of the international commodity market and the financial characteristics of BRIC countries (BRIC is an acronym for the economic bloc of countries consisting of Brazil, Russia, India, and China) based on the SVAR model. The empirical analysis finds the following: First, the financialization of the international commodity market gets stronger year by year, and it fluctuated at a high level after the 2008 financial crisis. Second, the financialization of the international commodity market has strong explanatory power for the financial development and financial structure of BRIC countries but relatively weak explanatory power for their financial openness and financial fictitiousness. Third, the higher financialization of the international commodity market will restrain the improvement of countries’ financial development and direct financing, especially of China and India. Fourth, the financialization of the international commodity market has the strongest explanatory power for Russia’s financial openness and financial fictitiousness but relatively weak explanatory power for China.
JEL codes: G15; C32
Keywords: international commodity market; financialization; BRIC countries; financial characteristics
How to cite: Li, L. (2024). “Financialization of International Commodity Market and Its Effects ‒ Empirical Analysis Based on the BRIC Countries,” Economics, Management, and Financial Markets 19(2): 32–59. doi: 10.22381/emfm19220243.
Received 4 July 2024 • Received in revised form 19 July 2024
Accepted 22 July 2024 • Available online 10 August 2024