Financial network linkages to predict economic output

Wei-Qiang Huang and Dan Wang

Finance Research Letters, 2020, vol. 33, issue C

Abstract: We investigate the impact of financial system on China's economic output from a financial institution tail-event driven networks (TENETs) perspective and forecast future economic growth by ARDL models. We assess five network topological measurements to reflect the change in the financial system, which detect tail risk spillover effects and reflect cross-sectional dimension of systemic risk. Through a study of relationship at different time lags, we find that except for total connectedness, all estimated network topological measurements have long-run positive impacts on economic growth and that test results present a highly accurate forecast for China's economic output using the network linkages.

Keywords: Systemic risk; Tail-event driven network; Topological measurements; Economic output; ARDL model (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:33:y:2020:i:c:s1544612319301746

DOI: 10.1016/j.frl.2019.06.004

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