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Cliometrics of world stock markets evolving networks

Author

Listed:
  • Cécile Bastidon

    (Université de Toulon
    ENS Lyon)

  • Antoine Parent

    (Université Paris 8
    OFCE-Sciences Po
    ENS Lyon)

Abstract

This article crosses two fields: financial cliometrics and networks graphs. The results illustrate that the field of application of operations research methods on graphs is very broad. We assess how the web of global stock markets linkages has changed over 1960–2018. We compute minimum spanning trees and hierarchical trees using six institutional sub-periods, and document the long term evolution of network patterns using different network metrics. Then we analyse the time dynamics of linkages, focusing on the most connected nodes. Finally, we analyse the effect of the network structure on system resilience. We highlight two main contributions of network graphs and operations research methods to financial cliometrics. First, we highlight a long term evolution of stock market network patterns from a monostar to a multistar network. This structural shift is associated to a greater connectivity of the hubs, leading to less resilience of the system. The sharp decrease in local path lengths strengthens this effect. Our second major outcome is that network graphs provide a methodological corpus to explain the role of path dependence in financial history. This is particularly true to explain the persistent centrality of a small number of hubs of world stock markets networks.

Suggested Citation

  • Cécile Bastidon & Antoine Parent, 2024. "Cliometrics of world stock markets evolving networks," Annals of Operations Research, Springer, vol. 332(1), pages 23-53, January.
    • Handle: RePEc:spr:annopr:v:332:y:2024:i:1:d:10.1007_s10479-022-04564-z
    DOI: 10.1007/s10479-022-04564-z
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    Cited by:

    1. Lu, Shuai & Li, Shouwei, 2023. "Is institutional herding efficient? Evidence from an investment efficiency and informational network perspective," Journal of Behavioral and Experimental Finance, Elsevier, vol. 39(C).
    2. Nikolay K. Vitanov & Zlatinka I. Dimitrova, 2024. "A Mathematical Theory of Motion of Researchers between Research Organizations," Mathematics, MDPI, vol. 12(13), pages 1-19, June.

    More about this item

    Keywords

    World stock markets structure; Network graphs; Contextual perspective of operations research; Financial cliometrics; Path dependence; Financial hubs;
    All these keywords.

    JEL classification:

    • C02 - Mathematical and Quantitative Methods - - General - - - Mathematical Economics
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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