Social dynamics of financial networks

Recurrent interactions between agents play an essential role in the organization of a dynamic complex system. While intensive researches have been done on social systems formed by human interactions, dynamical rules are not well understood in economic systems. Here we study the evolution of financia...

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Bibliographic Details
Published in:EPJ data science 2018-06, Vol.7 (1), p.15-19, Article 15
Main Authors: Kobayashi, Teruyoshi, Takaguchi, Taro
Format: Article
Language:English
Subjects:
Banking industry
Borrowing
Complex systems
Complexity
Computer Appl. in Social and Behavioral Sciences
Computer Science
Data science
Data-driven Science
Economic crisis
Financial institutions
Financial networks
Fitness model
International finance
Modeling and Theory Building
Recessions
Regular Article
Scaling
Social organization
Systemic risk
Temporal networks
Time series
Trends
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Summary:Recurrent interactions between agents play an essential role in the organization of a dynamic complex system. While intensive researches have been done on social systems formed by human interactions, dynamical rules are not well understood in economic systems. Here we study the evolution of financial networks and show that repeated interactions between financial institutions taking place at the daily scale are characterized by social communication patterns of humans emerging at higher time scales. The “social” dynamics of financial interactions are highly stable and little affected by external shocks such as the occurrence of the global financial crisis. A dynamic network model based on random pairwise matching accurately explains the observed daily dynamical patterns. The observed similarity between social and financial interactions gives us previously unknown stylized facts about a financial system, which could lead to a deeper understanding of the fundamental source of systemic risk.
ISSN:2193-1127
2193-1127
DOI:10.1140/epjds/s13688-018-0143-y