Authority Centrality and Hub Centrality as Metrics of Systemic Importance of Financial Market Infrastructures

León, Carlos

doi:10.2139/ssrn.2290271

Cited by 16 publications

(17 citation statements)

References 12 publications

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“…However it eliminates zero-centrality problem of eigen-pair analysis by calculating hub and authority centralities of nodes simultaneously and iteratively depending on that mutually reinforcing relationship. Leon and Perez summarized this iterative process as the estimation of eigenvector centrality of two modified versions of adjacency matrix (Leon and Perez, 2013). On this basis, ℎ = and ℎ = can be called as hub matrix and authority matrix of which eigenvector centralities refer to hub centrality and authority centrality, respectively (Kolaczyk, 2009).…”

Section: Methodsmentioning

confidence: 99%

“…Leon and Perez explains the logic behin these hub and authority matrices like that (Leon and Perez, 2013). Multiplication of a directed (non-symetrical) adjacency matrix with transpose of itself enables one to identify second-order adjacencies.…”

Section: Methodsmentioning

confidence: 99%

“…There are a number of analysis which use these metrics as centrality measures. In one of them, Leon and Perez (2013) analyzed Colombian financial market infrastructure of which functions are composed of trading and registration, clearing and settlement, largevalue payment systems and retail payment systems. They build a weighted matrix of which components correspond to daily average gross value of transactions for 2011 within financial market structure mentioned above.…”

Section: Literature Reviewmentioning

confidence: 99%

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Network analysis of interbank cross-border flows at country level (2006 - 2015)

Eren¹,

Soyyiğit²

2017

Pressacademia

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In today's globalized world, economic activities are performed beyond the physical boundaries of countries. It can be seen as increasing activities such as trade of goods, financial flows and trade of intermediate goods. Network analysis, that has been used to analyze formations of complex systems recently, is frequently used to investigate these global economic relations. In this context, international trade networks, financial networks and global production networks (input-output networks) are some of the fields that are analyzed in an interdisciplinary way. In this study, it is aimed to analyze interbank cross-border flows at country-level by applying network analysis. Thus, we expect to investigate the systemic importance and vulnerabilities of countries in international banking sector by applying HITs algorithm from 2006 to 2015. HITs algorithm has an advantage since it takes second order adjacencies of countries into consideration. As a consequence of the analysis, it will be possible to see the effects of global and Eurozone crises on systemic importance and vulnerabilities of countries.

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Literature Reviewmentioning

confidence: 99%

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Network analysis of interbank cross-border flows at country level (2006 - 2015)

Eren¹,

Soyyiğit²

2017

Pressacademia

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“…The problem is to identify the influence of structural characteristics of the network on its financial stability. In order to obtain a deeper understanding of the impact of the financial system architecture on its reliability, most studies use numerical and visual methods of network analysis, for example, in the works Leon & Perez, 2014;, which analyzed the national payment and settlement systems of Colombia were undertaken. They confirmed that these local financial networks tend to self-organize in the form of a modular (i.e.…”

Section: Finanacial Networkmentioning

confidence: 99%

“…We can mention the four most important consequences that are directly related to financial stability . First, the presence of a modular scale-invariant FS architecture leads to the fact that the results of traditional modeling of financial systems based on their homogenization in the form of homogeneous systems (as was done in the famous paper (Leon & Perez, 2014)) can be misleading due to misunderstanding of the influence of the factor of connectedness in finding out the mechanism and dynamics in distribution of financial contagions. Secondly, such architecture is a new feature of a complex interaction and adaptive behavior of financial institutions, which contributes to the fact that the system adjusts itself in such a way as to promote the growth of routine reliability and performance, with a few exceptions leading to the system fragility, as well as to the evolution of the systems in full agreement with the famous definition of financial networks as "reliable, but fragile" (Allen & Gale, 2000).…”

Section: Finanacial Networkmentioning

confidence: 99%

Stability analysis of the banking system: a complex systems approach

Karaev¹,

Melnichuk²,

Guev³

et al. 2017

Journal of International Studies

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Abstract. The present work deals with the stability analysis of a banking system with the structure in the form of Apollonian graph based on such characteristics of the banking system as the modularity and inhomogeneous distribution of banks by degree, on the basis of the extended mean-field Nier model (a static approach based on a simplified balance sheet of assets and liabilities of the bank) which was used to analyze the extent of the process of bankruptcy of banks after the default of one of the banks in the banking system. The obtained results of research of stability of banking systems based on the Apollonian graphs indicate that such characteristics as modularity (i.e. clustering), and the heterogeneity of banks in the structure of the model of banking systems allow them to conform «isomorphous structure» typical of the majority of real social and biological complex adaptive systems.

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