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Social networks in the global banking sector

Joel F. Houston, Jongsub Lee and Felix Suntheim

Journal of Accounting and Economics, 2018, vol. 65, issue 2, 237-269

Abstract: We show that banks with shared social connections partner more often in the global syndicated loan market and that central banks in the network play dominant roles in various interbank transactions, indicating that social connections facilitate business connections. However, more centralized banks in the network also contribute significantly to the global systemic risk. Moreover, we find the soft information generated by social networks is particularly valuable when potential partners operate under different accounting and regulatory standards. Finally, we show that the recent banking crisis significantly limited the positive soft information effects of social networks in the global banking system.

Keywords: Top global banks; Director social networks; Pairwise connection; Network centrality; Loan syndication; Systemic risk; IFRS; Bank regulation; Financial crisis (search for similar items in EconPapers)
JEL-codes: G20 G24 G28 (search for similar items in EconPapers)
Date: 2018
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Journal of Accounting and Economics is currently edited by J. L. Zimmerman, S. P. Kothari, T. Z. Lys and R. L. Watts

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Handle: RePEc:eee:jaecon:v:65:y:2018:i:2:p:237-269