Bank Networks from Text: Interrelations, Centrality and Determinants

29 Pages Posted: 19 Jan 2016

See all articles by Samuel Rönnqvist

Samuel Rönnqvist

Åbo Akademi University - Turku Centre for Computer Science (TUCS)

Peter Sarlin

Hanken School of Economics; RiskLab Finland

Date Written: January 18, 2016

Abstract

In the wake of the still ongoing global financial crisis, bank interdependencies have come into focus in trying to assess linkages among banks and systemic risk. To date, such analysis has largely been based on numerical data. By contrast, this study attempts to gain further insight into bank interconnections by tapping into financial discourse. We present a text-to-network process, which has its basis in co-occurrences of bank names and can be analysed quantitatively and visualized. To quantify bank importance, we propose an information centrality measure to rank and assess trends of bank centrality in discussion. For qualitative assessment of bank networks, we put forward a visual, interactive interface for better illustrating network structures. We illustrate the text-based approach on European Large and Complex Banking Groups (LCBGs) during the ongoing financial crisis by quantifying bank interrelations and centrality from discussion in 3M news articles, spanning 2007Q1 to 2014Q3.

Keywords: bank networks, information centrality, systemic risk, text analysis

JEL Classification: E

Suggested Citation

Rönnqvist, Samuel and Sarlin, Peter, Bank Networks from Text: Interrelations, Centrality and Determinants (January 18, 2016). ECB Working Paper No. 1876, Available at SSRN: https://ssrn.com/abstract=2717326

Samuel Rönnqvist (Contact Author)

Åbo Akademi University - Turku Centre for Computer Science (TUCS) ( email )

Joukahaisenkatu 3-5
Turku, 20520
Finland

Peter Sarlin

Hanken School of Economics

PO Box 479
FI-00101 Helsinki
Finland

RiskLab Finland ( email )

Turku, 20520
Finland

HOME PAGE: http://risklab.fi/people/peter/

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