Toward generalization of futures contracts for raw materials: A probabilistic answer applied to metal markets

Florian Fizaine (1)

1 IREGE - Institut de Recherche en Gestion et en Economie

In this paper, we aim at identifying root causes linked to presence or absence of futures contracts for raw materials. Unlike previous analyses focused on the success of futures contracts via exchange volume and open interest, we offer an alternative logit model applied to the presence or absence of futures contracts for 53 metal markets. We use different factors (price and physical quantities produced, geographical concentration…) and several combinations of variables in order to explore the root causes of futures contracts. The model shows both great explaining capability and a good prediction power which are robust to data resampling. According to the model, it is unlikely that minor metals successfully introduce futures contracts in the coming years. We also discuss the use and interest of this model by institutions and financial authorities devoted to the development of futures contracts for raw material markets.

Mots clés: Financialization; Raw materials; Logit model; Metals; Futures contract

Domaines: Sciences de l'Homme et Société; Economies et finances; Etudes de l'environnement

Florian Fizaine. Toward generalization of futures contracts for raw materials: A probabilistic answer applied to metal markets. Resources Policy, 2018, 59, pp.379-388. ⟨halshs-01957410⟩