Privacy-Preserving Network Analytics

Management Science

63 Pages Posted: 19 Oct 2020 Last revised: 9 May 2022

See all articles by Marcella Hastings

Marcella Hastings

University of Pennsylvania - Department of Computer and Information Science

Brett Hemenway Falk

University of Pennsylvania - Department of Computer and Information Science

Gerry Tsoukalas

University of Pennsylvania - The Wharton School; Boston University; Luohan Academy

Date Written: March 12, 2021

Abstract

We develop a new privacy-preserving framework for a general class of financial network models, leveraging cryptographic principles from secure multi-party computation and decentralized systems. We show how aggregate-level network statistics required for stability assessment and stress testing, can be derived from real data, without any individual node revealing its private information to any outside party, be it other nodes in the network, or even a central agent. Our work bridges the gap between established theories of financial network contagion and systemic risk, that assume agents have full network information, and the real world, where information sharing is hindered by privacy and security concerns.

Keywords: Contagion; Data Privacy; Financial Networks; Financial Regulation; Financial Technologies; Secure Multi-party Computation (MPC); Network Reconstruction; Privacy Preservation; Stress Testing; Systemic Risk.

JEL Classification: E6, G2, L5, O3, C6

Suggested Citation

Hastings, Marcella and Hemenway Falk, Brett and Tsoukalas, Gerry, Privacy-Preserving Network Analytics (March 12, 2021). Management Science, Available at SSRN: https://ssrn.com/abstract=3680000 or http://dx.doi.org/10.2139/ssrn.3680000

Marcella Hastings

University of Pennsylvania - Department of Computer and Information Science ( email )

3330 Walnut Street
Philadelphia, PA 19104
United States

Brett Hemenway Falk

University of Pennsylvania - Department of Computer and Information Science ( email )

3330 Walnut Street
Philadelphia, PA 19104
United States

Gerry Tsoukalas (Contact Author)

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Boston University ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Luohan Academy ( email )

No. 556, Xixi Road, Z Space
Xihu District
Hangzhou, Zhejiang 310013
China

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