Advances in Complex Systems

<article class="align-center media media--type-link media--view-mode-default"><div class="field field--name-field-media-entity-link field--type-link field--label-hidden field__item"><a href="https://doi.org/10.48550/arXiv.1507.01901" target="_blank">18, pp. 1550022</a></div>
 
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Banking Networks and Leverage Dependence: Evidence from Selected Emerging Countries

Banking Networks and Leverage Dependence: Evidence from Selected Emerging Countries - https://doi.org/10.48550/arXiv.1507.01901

Abstract

We use bank-level balance sheet data from 2005 to 2010 to study interactions within the banking system of five emerging countries: Argentina, Brazil, Mexico, South Africa, and Taiwan. For each country we construct a financial network based on the leverage ratio dependence between each pair of banks, and find results that are comparable across countries. Banks present a variety of leverage ratio behaviors. This leverage diversity produces financial networks that exhibit a modular structure characterized by one large bank community, some small ones and isolated banks. There exist compact structures that have synchronized dynamics. Many groups of banks merge together creating a financial network topology that converges to a unique big cluster at a relatively low leverage dependence level. Finally, we propose a model that includes corporate and interbank loans for studying the banking system. This model generates networks similar to the empirical ones. Moreover, we find that faster-growing banks tend to be more highly interconnected between them, and this is also observed in empirical data.

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Banking Networks and Leverage Dependence: Evidence from Selected Emerging Countries

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