Transaction Network Structural Shift under Crisis: Macro and Micro Perspectives

Andry Alamsyah, Dian Puteri Ramadhani, Farida Titik Kristanti and Khairunnisa Khairunnisa
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Andry Alamsyah: School of Economic and Business, Telkom University, Bandung 40257, Indonesia
Dian Puteri Ramadhani: School of Economic and Business, Telkom University, Bandung 40257, Indonesia
Farida Titik Kristanti: School of Economic and Business, Telkom University, Bandung 40257, Indonesia
Khairunnisa Khairunnisa: School of Economic and Business, Telkom University, Bandung 40257, Indonesia

Economies, 2022, vol. 10, issue 3, 1-12

Abstract: In 2008, the Lehman Brothers’ bankruptcy, accumulated from the global financial crisis, proved a unique role of the highly interconnected financial entities. Shocks in a bank might trigger loss, induce spillovers, provoke a contagion shock spreading to other entities, trigger the whole banking system to collapse, and ultimately unsettle the worldwide economy. Therefore, evaluating financial stability through a system-wide network approach provides more adequate knowledge than evaluating a bank as an individual. In this approach, individual banks and their transaction activities are modeled into a transaction network, forming a network topology. Financial shocks are generally detected through various macro procedures, such as outstanding external debt and uncontrolled transaction deficits. This study proposes financial shock detection from a macro and micro perspective by exploring the effect of disruption on transaction network structure. We investigate the most changing triadic motif as a crisis predictor from a micro perspective due to the crisis period. The case study is the transaction network structural shift under the 2008 crisis in Indonesia, where the observations were performed from the pre-crisis to the post-crisis period. We discovered a motif with the significant changes as the underlying financial crisis predictor. This scenario provides support for the financial system’s stability control.

Keywords: transaction network; network structure; network topology; network motifs; financial crisis (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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