Structure of Investor Networks and Financial Crises

Posted: 18 Feb 2021 Last revised: 10 Mar 2021

See all articles by Kęstutis Baltakys

Kęstutis Baltakys

Tampere University - Financial Computing and Data Analysis

Viet Hung Le

Faculty of Information Technology and Communication Sciences, Tampere University

Juho Kanniainen

Tampere University

Date Written: February 22, 2021

Abstract

In this paper, we ask whether the structure of investor networks, which are estimated using shareholder registration data, is abnormal during financial crises. We answer this question by analyzing the structure of investor networks through 10 prominent features. The networks are estimated from data on marketplace transactions of all publicly traded securities executed in the Helsinki Stock Exchange by Finnish stock shareholders between 1995 and 2016. We observe that most of the feature distributions were abnormal during the 2008--2009 financial crisis, with statistical significance. This paper provides evidence that the financial crisis was associated with a structural change in investors' trade time synchronization. This indicates that the way how investors use their private information channels changes over market conditions.

Keywords: Investor networks, Financial crisis, Complex networks, Network theory, Network topology, Stock markets

JEL Classification: G10

Suggested Citation

Baltakys, Kęstutis and Le, Viet Hung and Kanniainen, Juho, Structure of Investor Networks and Financial Crises (February 22, 2021). Available at SSRN: https://ssrn.com/abstract=3773511 or http://dx.doi.org/10.2139/ssrn.3773511

Kęstutis Baltakys (Contact Author)

Tampere University - Financial Computing and Data Analysis ( email )

Finland

Viet Hung Le

Faculty of Information Technology and Communication Sciences, Tampere University ( email )

Finland

Juho Kanniainen

Tampere University ( email )

P.O. 541, Korkeakoulunkatu 8 (Festia building)
Tampere, FI-33101
Finland

HOME PAGE: http://https://sites.google.com/site/juhokanniainen/

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