Money Flow Network Among Firms’ Accounts in a Regional Bank of Japan

33 Pages Posted: 29 Jul 2020 Last revised: 26 Mar 2021

See all articles by Yoshi Fujiwara

Yoshi Fujiwara

University of Hyogo - Graduate School of Information Science

Hiroyasu Inoue

University of Hyogo, Graduate School of Information Science

Takayuki Yamaguchi

Shiga University

Hideaki Aoyama

RIKEN iTHEMS; Research Institute for Economy, Industry and Trade (RIETI)

Takuma Tanaka

Shiga University

Kentaro Kikuchi

Shiga University

Date Written: March 26, 2021

Abstract

In this study, we investigate the flow of money among bank accounts possessed by firms in a region by employing an exhaustive list of all the bank transfers in a regional bank in Japan, to clarify how the network of money flow is related to the economic activities of the firms. The network statistics and structures are examined and shown to be similar to those of a nationwide production network. Specifically, the bowtie analysis indicates what we refer to as a "walnut" structure with core and upstream/downstream components. To quantify the location of an individual account in the network, we used the Hodge decomposition method and found that the Hodge potential of the account has a significant correlation to its position in the bowtie structure as well as to its net flow of incoming and outgoing money and links, namely the net demand/supply of individual accounts. In addition, we used non-negative matrix factorization to identify important factors underlying the entire flow of money; it can be interpreted that these factors are associated with regional economic activities. One factor has a feature whereby the remittance source is localized to the largest city in the region, while the destination is scattered. The other factors correspond to the economic activities specific to different local places. This study serves as a basis for further investigation on the relationship between money flow and economic activities of firms.

Keywords: input-output table, Hodge decomposition, non-negative matrix factorization, bowtie-walnut structure

JEL Classification: E00, E40, C00, C02

Suggested Citation

Fujiwara, Yoshi and Inoue, Hiroyasu and Yamaguchi, Takayuki and Aoyama, Hideaki and Tanaka, Takuma and Kikuchi, Kentaro, Money Flow Network Among Firms’ Accounts in a Regional Bank of Japan (March 26, 2021). Available at SSRN: https://ssrn.com/abstract=3662893 or http://dx.doi.org/10.2139/ssrn.3662893

Yoshi Fujiwara (Contact Author)

University of Hyogo - Graduate School of Information Science ( email )

7-1-28 Minato-jima, Minami-machi
Chuo-ku
Kobe, Hyogo 650-0047
Japan

Hiroyasu Inoue

University of Hyogo, Graduate School of Information Science ( email )

7-1-28 Minato-jima, Minami-machi
Chuo-ku
Kobe, Hyogo 650-0047
Japan

Takayuki Yamaguchi

Shiga University ( email )

Hikone, Shiga, 522-8522
United States

Hideaki Aoyama

RIKEN iTHEMS ( email )

Wako, Saitama 351-0198
Japan
+81-9019011954 (Phone)

Research Institute for Economy, Industry and Trade (RIETI) ( email )

1-3-1 Kasumigaseki
Chiyoda-ku
Tokyo 100-8901
Japan

Takuma Tanaka

Shiga University ( email )

Hikone, Shiga, 522-8522
United States

Kentaro Kikuchi

Shiga University ( email )

1-1-1 Bamba
Hikone, Shiga 522-8522
Japan

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