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Evolution of controllability in interbank networks


Delpini, Danilo; Battiston, Stefano; Riccaboni, Massimo; Gabbi, Giampaolo; Pammolli, Fabio; Caldarelli, Guido (2013). Evolution of controllability in interbank networks. Scientific Reports, 3(1626):online.

Abstract

The Statistical Physics of Complex Networks has recently provided new theoretical tools for policy makers. Here we extend the notion of network controllability to detect the financial institutions, i.e. the drivers, that are most crucial to the functioning of an interbank market. The system we investigate is a paradigmatic case study for complex networks since it undergoes dramatic structural changes over time and links among nodes can be observed at several time scales. We find a scale-free decay of the fraction of drivers with increasing time resolution, implying that policies have to be adjusted to the time scales in order to be effective. Moreover, drivers are often not the most highly connected "hub" institutions, nor the largest lenders, contrary to the results of other studies. Our findings contribute quantitative indicators which can support regulators in developing more effective supervision and intervention policies.

Abstract

The Statistical Physics of Complex Networks has recently provided new theoretical tools for policy makers. Here we extend the notion of network controllability to detect the financial institutions, i.e. the drivers, that are most crucial to the functioning of an interbank market. The system we investigate is a paradigmatic case study for complex networks since it undergoes dramatic structural changes over time and links among nodes can be observed at several time scales. We find a scale-free decay of the fraction of drivers with increasing time resolution, implying that policies have to be adjusted to the time scales in order to be effective. Moreover, drivers are often not the most highly connected "hub" institutions, nor the largest lenders, contrary to the results of other studies. Our findings contribute quantitative indicators which can support regulators in developing more effective supervision and intervention policies.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Language:English
Date:2013
Deposited On:04 Mar 2015 15:42
Last Modified:16 Feb 2018 20:04
Publisher:Nature Publishing Group
ISSN:2045-2322
OA Status:Gold
Free access at:PubMed ID. An embargo period may apply.
Publisher DOI:https://doi.org/10.1038/srep01626
PubMed ID:23568033
Other Identification Number:merlin-id:10138

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