THE STRUCTURE OF FINANCIAL NETWORKS, AND WESTERN BALKAN BANKING SYSTEMS

Dražen Cvijanović

Economic Annals, 2019, vol. 64, issue 221, 7 - 32

Abstract: This paper analyses the structure of the part of the global finan-cial network that the banking systems of the Western Balkan countries belong to for the period 2007–2013. The data it uses is mostly from BIS consolidated banking statistics and the methodological tools used are based on network theory. It finds that a few features of the pan-European finan-cial network strongly influence the likeli-hood of risk transfer to the Western Balkan area. First, the banking systems of the six Western Balkan countries are periphery nodes in the financial network. Second, the network is highly concentrated around a small number of nodes and all other nodes are weakly interconnected. Third, there are three nodes or regional common lend-ers that have dominant roles in the West-ern Balkan banking systems: the banking systems of Austria, Italy, and Greece. The conclusion is that in the case of financial distress anywhere in the financial network, risk could easily spread to Western Balkan banking systems, with the interconnections in the financial network having the effect of a risk transmitter. Wherever in the network the initial shock is sufficiently strong, finan-cial contagion could easily spread to the Western Balkan area through the regional common lenders.

Keywords: financial networks; finan-cial contagion; regional common lenders; global common lenders; deleveraging (search for similar items in EconPapers)
JEL-codes: G01 G10 G21 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.ekof.bg.ac.rs/wp-content/uploads/2019/07/574.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:beo:journl:v:64:y:2019:i:221:p:7-32

Ordering information: This journal article can be ordered from
http://ea.ekof.bg.ac.rs/

Access Statistics for this article

Economic Annals is currently edited by Will Bartlett

More articles in Economic Annals from Faculty of Economics and Business, University of Belgrade Contact information at EDIRC.
Bibliographic data for series maintained by Goran Petrić ().