IDEAS home Printed from https://ideas.repec.org/a/eee/phsmap/v659y2025ics0378437124008380.html
   My bibliography  Save this article

Source identification on financial networks with label propagation

Author

Listed:
  • Hu, Zhao-Long
  • Jin, Qichao
  • Sun, Lei
  • Peng, Shuilin

Abstract

Borrowing and lending between banks and firms is the main channel of financial risk propagation, and there have been a number of studies on risk propagation and identification from the financial perspective. Despite complex networks are used as an important analytical tool for risk propagation in the financial system, there are few studies on analyzing financial risk source identification from the perspective of complex networks. With the help of complex network theory, we establish a multi-layer dynamic network between banks and firms, and propose an improved label propagation method for source identification based on the node degree, and this method can be applied to source identification under conditions of incomplete observation. A series of simulation experiments show that the proposed method exhibits a significant advantage in identifying the propagation source of financial risk compared with the original label propagation method. A key conclusion is that when targeting nodes with the highest out-degree, highest in-degree, highest total assets, or highest lent assets, our method encounters significant difficulties in identifying the propagation sources. Conversely, employing an opposite strategy allows us to accurately pinpoint these sources. Moreover, we find that the accuracy of source identification is mainly affected by the proportion of unobserved nodes, while the number of sources and the average connectivity of the network have relatively little effect. This study provides a new perspective for the study of risk propagation identification in financial network systems.

Suggested Citation

  • Hu, Zhao-Long & Jin, Qichao & Sun, Lei & Peng, Shuilin, 2025. "Source identification on financial networks with label propagation," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 659(C).
  • Handle: RePEc:eee:phsmap:v:659:y:2025:i:c:s0378437124008380
    DOI: 10.1016/j.physa.2024.130328
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0378437124008380
    Download Restriction: Full text for ScienceDirect subscribers only. Journal offers the option of making the article available online on Science direct for a fee of $3,000

    File URL: https://libkey.io/10.1016/j.physa.2024.130328?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:phsmap:v:659:y:2025:i:c:s0378437124008380. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.