Social Networks in the Global Banking Sector

70 Pages Posted: 2 Jul 2013 Last revised: 8 Oct 2017

See all articles by Joel F. Houston

Joel F. Houston

University of Florida - Department of Finance, Insurance and Real Estate

Jongsub Lee

University of Florida - Warrington College of Business Administration

Felix Suntheim

International Monetary Fund (IMF) - Monetary and Capital Markets Department

Date Written: October 5, 2017

Abstract

We show that banks with shared social connections partner more often in the global syndicated loan market and that central banks in the network play dominant roles in various interbank transactions, indicating that social connections facilitate business connections. However, more centralized banks in the network also contribute significantly to the global systemic risk. Moreover, we find the soft information generated by social networks is particularly valuable when potential partners operate under different accounting and regulatory standards. Finally, we show that the recent banking crisis significantly limited the positive soft information effects of social networks in the global banking system.

Keywords: Top global banks, director social networks, pairwise connection, network centrality, loan syndication, systemic risk, IFRS, bank regulation, financial crisis

JEL Classification: G20, G24, G28

Suggested Citation

Houston, Joel F. and Lee, Jongsub and Suntheim, Felix, Social Networks in the Global Banking Sector (October 5, 2017). Journal of Accounting & Economics (JAE), Forthcoming, Available at SSRN: https://ssrn.com/abstract=2288134 or http://dx.doi.org/10.2139/ssrn.2288134

Joel F. Houston

University of Florida - Department of Finance, Insurance and Real Estate ( email )

P.O. Box 117168
Gainesville, FL 32611
United States

Jongsub Lee (Contact Author)

University of Florida - Warrington College of Business Administration ( email )

Department of Finance Insurance & Real Estate
P.O. Box 117168
Gainesville, FL 32611-7168
United States
352-273-4966 (Phone)
352-392-0301 (Fax)

Felix Suntheim

International Monetary Fund (IMF) - Monetary and Capital Markets Department ( email )

United States

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