Empirical Analysis of the Architecture of the Interbank Market and Credit Market Using Network Theory

Giulia Masi ()
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Giulia Masi: Dipartimento di Economia, Università Politecnica delle Marche

A chapter in Networks, Topology and Dynamics, 2009, pp 241-256 from Springer

Abstract: Abstract The credit relationships in an economic system are essentially three: the interbank market, the lending market between banks and firms, the commercial credit among firms. Here the focus is on the first two kinds of credit, using network tools. The graph theory, which is at the basis of network analysis, is used as the natural mathematical environment to investigate the architecture (topology) of these markets. The interbank market is represented as a network where the nodes are banks and the links are the reciprocal exposures. The lending relationships between banks and firms is represented by a bipartite graph where the nodes are of two kinds: banks and firms. From the bipartite graph, the network of cofinancing banks is extracted. We observe the leading role of large Italian banks which form a strong core in the network both in the interbank and in the lending market. The small banks act as lenders and the large as borrowers in the interbank market. Both of them finance firms on the lending market, the large ones financing the most of the large firms, while the small ones the small local firms.

Keywords: Bipartite Graph; Euro Area; European Central Bank; Large Bank; Small Bank (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-540-68409-1_13

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DOI: 10.1007/978-3-540-68409-1_13

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