Estimating risk propagation between interacting firms on inter-firm complex network

Hayato Goto, Hideki Takayasu and Misako Takayasu

PLOS ONE, 2017, vol. 12, issue 10, 1-12

Abstract: We derive a stochastic function of risk propagation empirically from comprehensive data of chain-reaction bankruptcy events in Japan from 2006 to 2015 over 5,000 pairs of firms. The probability is formulated by firm interaction between the pair of firms; it is proportional to the product of α-th power of the size of the first bankrupt firm and β-th power of that of the chain-reaction bankrupt firm. We confirm that α is positive and β is negative throughout the observing period, meaning that the probability of cascading failure is higher between a larger first bankrupt firm and smaller trading firm. We additionally introduce a numerical model simulating the whole ecosystem of firms and show that the interaction kernel is a key factor to express complexities of spreading bankruptcy risks on real ecosystems.

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0185712 (text/html)
https://journals.plos.org/plosone/article/file?id= ... 85712&type=printable (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:plo:pone00:0185712

DOI: 10.1371/journal.pone.0185712

Access Statistics for this article

More articles in PLOS ONE from Public Library of Science
Bibliographic data for series maintained by plosone ().