Endogenous network of firms and systemic risk

Qianting Ma, Jianmin He and Shouwei Li

Physica A: Statistical Mechanics and its Applications, 2018, vol. 492, issue C, 2273-2280

Abstract: We construct an endogenous network characterized by commercial credit relationships connecting the upstream and downstream firms. Simulation results indicate that the endogenous network model displays a scale-free property which exists in real-world firm systems. In terms of the network structure, with the expansion of the scale of network nodes, the systemic risk increases significantly, while the heterogeneities of network nodes have no effect on systemic risk. As for firm micro-behaviors, including the selection range of trading partners, actual output, labor requirement, price of intermediate products and employee salaries, increase of all these parameters will lead to higher systemic risk.

Keywords: Endogenous network Commercial credit; Scale-free property; Network structure; Firm micro-behaviors (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:492:y:2018:i:c:p:2273-2280

DOI: 10.1016/j.physa.2017.11.141

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