commodify

verb com·mod·i·fy \ kə-ˈmä-də-ˌfī \

Definition of commodify

commodified; commodifying
transitive verb
: to turn (something, such as an intrinsic value or a work of art) into a commodity
  • attempts to commodify the water supply

commodification

play \kə-ˌmä-də-fə-ˈkā-shən\ noun

Examples of commodify in a Sentence

  1. Do we really want to commodify our water supply?

  2. I feel like our culture is being commodified.

Recent Examples of commodify from the Web

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'commodify.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Origin and Etymology of commodify


Financial Definition of COMMODIFY

commodification

What It Is

Commodification refers to a good or service becoming indistinguishable from similar products.

How It Works

To be considered a commodity, an item must satisfy three conditions: 1) it must be standardized and, for agricultural and industrial commodities, in a "raw" state; 2) it must be usable upon delivery; and 3) its price must vary enough to justify creating a market for it.

Most people understand commoditization pertaining to corn, soybeans, cotton, or other raw materials (i.e., the idea that "it's all the same."), but financial instruments can be commoditized, too.

For example, in the past, every mortgage issued was considered unique -- that is, the terms and conditions of the loans were customized to the borrower and the property. Over time, however, the Federal National Mortgage Association (Fannie Mae) Mac), and the Government National Mortgage Association (GNMA) commoditized mortgages by offering to buy almost any mortgage that met a set of conforming standards. By creating a massive market for mortgages, these agencies encouraged banks to streamline and standardize the types of mortgages they offer to consumers.  Therefore, commodification is present in mortgages today.

Why It Matters

Commodification makes an asset easier to trade makes the market more liquid. In some cases, this can add volatility to the price of the commoditized entity, but in other cases it can spur economic activity.

In the mortgage industry, commodification allows lenders to receive cash from selling conforming mortgages to government agencies and government-sponsored entities. Banks can then use the cash to issue more loans, which theoretically spurs economic growth.


COMMODIFY Defined for English Language Learners

commodify

verb

Definition of commodify for English Language Learners

  • : to treat (something that cannot be owned or that everyone has a right to) like a product that can be bought and sold


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