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Modeling the interdependent network based on two-mode networks

Author

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  • An, Feng
  • Gao, Xiangyun
  • Guan, Jianhe
  • Huang, Shupei
  • Liu, Qian

Abstract

Among heterogeneous networks, there exist obviously and closely interdependent linkages. Unlike existing research primarily focus on the theoretical research of physical interdependent network model. We propose a two-layer interdependent network model based on two-mode networks to explore the interdependent features in the reality. Specifically, we construct a two-layer interdependent loan network and develop several dependent features indices. The model is verified to enable us to capture the loan dependent features of listed companies based on loan behaviors and shared shareholders. Taking Chinese debit and credit market as case study, the main conclusions are: (1) only few listed companies shoulder the main capital transmission (20% listed companies occupy almost 70% dependent degree). (2) The control of these key listed companies will be more effective of avoiding the spreading of financial risks. (3) Identifying the companies with high betweenness centrality and controlling them could be helpful to monitor the financial risk spreading. (4) The capital transmission channel among Chinese financial listed companies and Chinese non-financial listed companies are relatively strong. However, under greater pressure of demand of capital transmission (70% edges failed), the transmission channel, which constructed by debit and credit behavior, will eventually collapse.

Suggested Citation

  • An, Feng & Gao, Xiangyun & Guan, Jianhe & Huang, Shupei & Liu, Qian, 2017. "Modeling the interdependent network based on two-mode networks," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 483(C), pages 57-67.
    • Handle: RePEc:eee:phsmap:v:483:y:2017:i:c:p:57-67
    DOI: 10.1016/j.physa.2017.04.081
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    References listed on IDEAS

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    1. Li, Huajiao & An, Haizhong & Gao, Xiangyun & Huang, Jiachen & Xu, Qun, 2014. "On the topological properties of the cross-shareholding networks of listed companies in China: Taking shareholders’ cross-shareholding relationships into account," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 406(C), pages 80-88.
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    5. Huang, Danyang & Wang, Feifei & Zhu, Xuening & Wang, Hansheng, 2020. "Two-mode network autoregressive model for large-scale networks," Journal of Econometrics, Elsevier, vol. 216(1), pages 203-219.
    6. Huang, Qi-An & Zhao, Jun-Chan & Wu, Xiao-Qun, 2022. "Financial risk propagation between Chinese and American stock markets based on multilayer networks," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 586(C).

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