Intermediaries’ substitutability and financial network resilience: A hyperstructure approach
Olivier Accominotti,
Delio Lucena-Piquero and
Stefano Ugolini
Journal of Economic Dynamics and Control, 2023, vol. 153, issue C
Abstract:
This article studies the impact of intermediaries’ disappearance on firms’ access to the sterling money market during the first globalization era of 1880-1914. We propose a new methodology to assess intermediaries’ substitutability in financial networks featuring higher-order structures (credit intermediation chains). We represent the financial network as a hyperstructure and each credit intermediation chain as a hyperedge. This approach allows us to assess how the failure of intermediaries affects network connectivity. We apply this methodology to a unique dataset documenting the network structure of the sterling money market in the year 1906. Our results reveal that the failure of individual money market actors could only cause limited damage to the network as intermediaries were highly substitutable. These findings suggest that an international financial network without highly systemic nodes can emerge even at a time of global economic integration.
Keywords: Financial networks; Systemic risk; Hypergraphs; Intermediation chains; Bills of exchange; Hyperstructures (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165188923001069
Full text for ScienceDirect subscribers only
Related works:
Working Paper: Intermediaries’ Substitutability and Financial Network Resilience: A Hyperstructure Approach (2023) 
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:eee:dyncon:v:153:y:2023:i:c:s0165188923001069
DOI: 10.1016/j.jedc.2023.104700
Access Statistics for this article
Journal of Economic Dynamics and Control is currently edited by J. Bullard, C. Chiarella, H. Dawid, C. H. Hommes, P. Klein and C. Otrok
More articles in Journal of Economic Dynamics and Control from Elsevier
Bibliographic data for series maintained by Catherine Liu ().