The impact of commodity finance on resource availability

Peter Posch, Joachim Erhardt and Tarek Hard

Applied Economics Letters, 2015, vol. 22, issue 7, 525-528

Abstract: Most industrial nations are reliant on a secure supply of raw materials but typically do not possess access to primary resources; a situation widely accepted by their respective governments which have instigated a variety of programs to secure availability. In this article, we explore the effect of financing conditions on the availability of base metals. Using fixed effects regression on international trade and banking data we find a consistent negative relationship between the financing costs and imports of base metals after allowing for prices and country risk. These results indicate that resource availability with respect to base metals is increased with a reduction in financing costs to market participants. The amount differs across the base metals where copper sees the highest reduction of 3.3 tons for an increase of short-term financing costs by one basis point. Furthermore, the effect differs across countries with the European Union's states being highly dependent of imports in these materials. We interpret this at a firm level by considering the funding requirement during the import process and the relative sensitivity of market participants to financing costs.

Date: 2015
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/13504851.2014.955166 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:apeclt:v:22:y:2015:i:7:p:525-528

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/RAEL20

DOI: 10.1080/13504851.2014.955166

Access Statistics for this article

Applied Economics Letters is currently edited by Anita Phillips

More articles in Applied Economics Letters from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().