Architecture of the Banking Network in Bulgaria

Assoc. Prof. Lyubomir Georgiev () and PhD student Petar Nikolov
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Assoc. Prof. Lyubomir Georgiev: University of Economics - Varna

An Annual Book of University of Economics - Varna, 2021, vol. 91, issue 1, 5-74

Abstract: An important structural feature of any banking system is the network of exposures between individual credit institutions. Using data from the BNB and the annual reports of banks, this study „maps“ the network of interbank exposures in Bulgaria. It then analyzes its main features using the tools of network theory and matrix modeling. Many of the features of the banking network in Bulgaria are similar to those of networks in other countries. It is a typical representative of the complete „core-periphery“ structure with a higher degree of core connectivity and weakly connected periphery. The architecture of the banking network in Bulgaria shows that the levels of direct connection do not lead to a significant threat of spreading the infection. However, a potential threat could come from turbulence in international markets, expressed in the collapse of a large banking group, global economic turmoil, etc., which could „bring“ the infection from abroad through the bankruptcy of a systemically important subsidiary.

Keywords: network theory; banking network; principle of maximum entropy; financial contagion; sustainability of the banking system (search for similar items in EconPapers)
JEL-codes: G21 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:vrn:yrbook:y:2021:i:1:p:5-74

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