Examination of the commodity products available in the global financial markets using their market concentration levels

Authors

DOI:

https://doi.org/10.18559/ref.2020.2.5

Keywords:

commodity exchanges, market concentration, commodty products

Abstract

The primary objective of this study is to find the disparities in the commodity product offerings in various financial markets across the world along with their market concentration levels. Identifying the product gaps in commodity-based financial products offered by the worldwide financial exchanges can assist the decision makers to fill the existing gaps strategically and attain the worldwide competitive market of commodity exchanges for all nations. The Hirschman-Herfindahl Index, HHI, is used to measure market concentration grouped by geographical regions or exchanges. The disparity analysis until 2016 indicates a disparity between commodity products traded in several exchanges across different geographical regions. Asia covers the largest regions of the world and showcasing 26 commodity exchanges located in different countries with 2689 types of commodity products traded among these exchanges. North America’s 18 commodity exchanges show 8157 product types. Europe has 8 exchanges located in different countries with 1712 product types registered across these exchanges. Our analysis on market volume concentration for regions indicates that for the period 2012-2016, contract volume growth has increased. and reflects a high concentration of volume among all the regions. Our analysis of market volume concentration for exchanges indicates a moderate level of market concentration for 2012-2016.

Downloads

Download data is not yet available.

References

Agarwal, N., & Kaur, G. (2013). Agricultural Commodity Future Trading And Its Implications - An Overview. AIMA Journal of Management & Research, 7(2(4)).
View in Google Scholar

Amrouk, E. M., Poole, N., Mudungwe, N., & Muzvondiwa, E. (2013). The Impact of Commodity Development Projects on Smallholders’ Market Access in Developing Countries (No. 35). http://www.fao.org/3/a-aq290e.pdf
View in Google Scholar

Anderson, J. L., Asche, F., & Garlock, T. (2018). Globalization and commoditization: The transformation of the seafood market. Journal of Commodity Markets, 12(C). https://doi.org/DOI: 10.1016/j.jcomm.2017.12.0,
View in Google Scholar

Arnade, C., Cooke, B., & Gale, F. (2017). Agricultural price transmission: China relationships with world commodity markets. Journal of Commodity Markets, 7(C), 28–40. https://doi.org/DOI: 10.1016/j.jcomm.2017.07.0,
View in Google Scholar

Boyd, N. E., Harris, J. H., & Li, B. (2018). An update on speculation and financialization in commodity markets. Journal of Commodity Markets, 10(C), 91–104. https://doi.org/DOI: 10.1016/j.jcomm.2018.05.0,
View in Google Scholar

Cabrales, C. A., Granados Castro, J. C., & Ojeda Joya, J. (2014). The Effect of Monetary Policy on Commodity Prices: Disentangling the Evidence for Individual Prices. Economics Research International, 2014(685), 1–13. https://doi.org/10.1155/2014/649734
View in Google Scholar

Carter, C. A. (1999). Commodity futures markets: a survey. Australian Journal of Agricultural and Resource Economics, 43(2), 209–247. https://doi.org/10.1111/1467-8489.00077
View in Google Scholar

Cashin, P., McDermott, C. J., & Scott, A. (2002). Booms and slumps in world commodity prices. Journal of Development Economics, 69(1), 277–296. https://doi.org/10.1016/S0304-3878(02)00062-7
View in Google Scholar

Cheung, C., & Morin, S. (2007). The Impact of Emerging Asia on Commodity Prices. Money Affairs, XX(2), 181–224. http://hdl.handle.net/10419/53913
View in Google Scholar

Cutler, J., Chan, C., & Li, U. (2005). The Relationship between Commodity and Consumer Prices in Mainland China and Hong Kong (Working Papers, Issue 0508). Hong Kong Monetary Authority. https://www.hkma.gov.hk/media/eng/publication-and-research/quarterly-bulletin/qb200506/fa2.pdf
View in Google Scholar

Dimpfl, T., Flad, M., & Jung, R. C. (2017). Price discovery in agricultural commodity markets in the presence of futures speculation. Journal of Commodity Markets, 5(C), 50–62. https://doi.org/DOI: 10.1016/j.jcomm.2017.01.0,
View in Google Scholar

Ginevičius, R., & Čirba, S. (2007). Determining market concentration. Journal of Business Economics and Management, 8(1), 3–10. https://doi.org/10.1080/16111699.2007.9636147
View in Google Scholar

Gubler, M., & Hertweck, M. S. (2013). Commodity price shocks and the business cycle: Structural evidence for the U.S. Journal of International Money and Finance, 37(C), 324–352. https://doi.org/DOI: 10.1016/j.jimonfin.2013.0,
View in Google Scholar

Haase, M., Seiler Zimmermann, Y., & Zimmermann, H. (2016). The impact of speculation on commodity futures markets – A review of the findings of 100 empirical studies. Journal of Commodity Markets, 3(1), 1–15. https://doi.org/DOI: 10.1016/j.jcomm.2016.07.0,
View in Google Scholar

Harvey, D. I., Kellard, N. M., Madsen, J. B., & Wohar, M. E. (2017). Long-Run Commodity Prices, Economic Growth, and Interest Rates: 17th Century to the Present Day. World Development, 89(C), 57–70. https://doi.org/DOI: 10.1016/j.worlddev.2016.0,
View in Google Scholar

Hou, K., Tang, K., & Zhang, B. (2017). Political Uncertainty and Commodity Prices. SSRN Electronic Journal, 2017–25. https://doi.org/10.2139/ssrn.3064295
View in Google Scholar

Irwin, S. H., & Sanders, D. R. (2011). Index Funds, Financialization, and Commodity Futures Markets. Applied Economic Perspectives and Policy, 33(1), 1–31. https://doi.org/10.1093/aepp/ppq032
View in Google Scholar

Knittel, C. R., & Pindyck, R. S. (2016). The Simple Economics of Commodity Price Speculation. American Economic Journal: Macroeconomics, 8(2), 85–110. https://doi.org/10.1257/mac.20140033
View in Google Scholar

Kvålseth, T. O. (2018). Relationship between concentration ratio and Herfindahl-Hirschman index: A re-examination based on majorization theory. Heliyon, 4(10), e00846–e00846. https://doi.org/10.1016/j.heliyon.2018.e00846
View in Google Scholar

Larson, D. F., Varangis, P., & Yabuki, N. (1998). Commodity risk management and development (Policy Research Working Paper Series, Issue 1963). The World Bank. https://ssrn.com/abstract=597214
View in Google Scholar

Lee, C. (2007). SCP, NEIO and Beyond (No. 05; Working Paper Series 2007). http://www.agi.or.jp/workingpapers/WP2007-05.pdf
View in Google Scholar

Rashid, S. (2015). Commodity Exchanges and Market Development: What Have we Learned? (2015 Conference, August 9-14, 2015, Milan, Italy, Issue 212488). International Association of Agricultural Economists. https://ideas.repec.org/p/ags/iaae15/212488.html
View in Google Scholar

REJNUŠ, O. (2002). The Significance of commodity exchanges for trade in agricultural products in Czech Republic, and prospects of their future development. AGRIC. ECON, 48(10), 467–472.
View in Google Scholar

Roache, S. K. (2012). China’s Impact on World Commodity Markets (12/115; Working Paper No. 12/115). https://www.imf.org/en/Publications/WP/Issues/2016/12/31/China-s-Impacton-World-Commodity-Markets-25898
View in Google Scholar

Toby Roberts. (2014). When Bigger Is Better: A Critique of the Herfindahl-Hirschman Index’s Use to Evaluate Mergers in Network Industries. Pace Law Review, 34. https://digitalcommons.pace.edu/plr/vol34/iss2/8
View in Google Scholar

Tsetsekos Panos, G. V. (2000). Lessons in Structuring Derivatives Exchanges. World Bank Research Observer, 15(1), 85–98. https://doi.org/10.1093/wbro/15.1.85
View in Google Scholar

UNCTAD. (2009). Development Impacts of Commodity Exchanges. In United Nations publication. https://unctad.org/en/Docs/ditccom20089_en.pdf
View in Google Scholar

Downloads

Published

2020-11-16

Issue

Section

Articles

How to Cite

Valluri, S. (2020). Examination of the commodity products available in the global financial markets using their market concentration levels. Research Papers in Economics and Finance, 4(2), 53-63. https://doi.org/10.18559/ref.2020.2.5

Similar Articles

1-10 of 38

You may also start an advanced similarity search for this article.