Financial Networks as Directed Cyclic Graphs
CORPORATE OWNERSHIP AND CONTROL, Forthcoming
17 Pages Posted: 9 Feb 2014 Last revised: 28 Sep 2016
Date Written: February 16, 2014
Financial networks' study and understanding has become extremely important since the global financial meltdown in 2007-2009 when the inter-connectedness of institutions has surfaced as one of the major culprits for the magnitude of the distress. This paper aims at providing a new approach, based on a concept already in use in other domains such as physics and computer science, to describe and better understand the networks of institutions and their global properties. We draw some parallels and contrasts with other approaches to this field.
Keywords: financial networks, probabilistic graphical models, bayesian networks
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