Abstract
It is generally accepted that neighboring nodes in financial networks are negatively assorted with respect to the correlation between their degrees. This feature would play an important 'damping' role in the market during downturns (periods of distress) since this connectivity pattern between firms lowers the chances of auto-amplifying (the propagation of) distress. In this paper we explore a trade-network of industrial firms where the nodes are suppliers or buyers, and the links are those invoices that the suppliers send out to their buyers and then go on to present to their bank for discounting. The network was collected by a large Italian bank in 2007, from their intermediation of the sales on credit made by their clients. The network also shows dissortative behavior as seen in other studies on financial networks. However, when looking at the credit rating of the firms, an important attribute internal to each node, we find that firms that trade with one another share overwhelming similarity. We know that much data is missing from our data set. However, we can quantify the amount of missing data using information exposure, a variable that connects social structure and behavior. This variable is a ratio of the sales invoices that a supplier presents to their bank over their total sales. Results reveal a non-trivial and robust relationship between the information exposure and credit rating of a firm, indicating the influence of the neighbors on a firm's rating. This methodology provides a new insight into how to reconstruct a network suffering from incomplete information.
Original language | English |
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Title of host publication | Proceedings of the 48th Annual Hawaii International Conference on System Sciences, HICSS 2015 |
Editors | Tung X. Bui, Ralph H. Sprague |
Publisher | IEEE Computer Society |
Pages | 1606-1615 |
Number of pages | 10 |
ISBN (Electronic) | 9781479973675 |
DOIs | |
State | Published - 26 Mar 2015 |
Event | 48th Annual Hawaii International Conference on System Sciences, HICSS 2015 - Kauai, United States Duration: 5 Jan 2015 → 8 Jan 2015 |
Publication series
Name | Proceedings of the Annual Hawaii International Conference on System Sciences |
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Volume | 2015-March |
ISSN (Print) | 1530-1605 |
Conference
Conference | 48th Annual Hawaii International Conference on System Sciences, HICSS 2015 |
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Country/Territory | United States |
City | Kauai |
Period | 5/01/15 → 8/01/15 |
Bibliographical note
Publisher Copyright:© 2015 IEEE.
Keywords
- Assortative mixing
- Credit rating
- Dissortative networks
- Economy
- Industrial firms
- IOU
- Missing data
- Networks