IDEAS home Printed from https://ideas.repec.org/p/phd/dpaper/dp_2024-17.html
   My bibliography  Save this paper

Network Structure of Financial Institutions in the Philippines: Insights on Corporate Control and Competition

Author

Listed:
  • Serafica, Ramonette B.
  • Tabuga, Aubrey D.
  • Baino, Madeleine Louise S.
  • Ruiz, Mark Gerald C.

Abstract

This exploratory study focuses on understanding the structure of networks of financial institutions in the Philippines. The literature notes that the financial sector occupies a central position within corporate networks. More importantly, the significance of deepening understanding of the connections within the financial sector stems from its role as an intermediate sector. The financial sector is crucial because of its role in promoting efficiency in other economic sectors. In fact, this sector occupies a unique position of influence regarding how the wealth of an economy is generated and allocated. Using a network lens, the structure of interrelationships via ownership is examined to draw insights related to corporate control, competition, and financial sector development. Data from the Philippine Stock Exchange on publicly listed financial companies and their networks is utilized to distinguish between subsidiary networks, ownership networks, and networks created by board interlocks. The subsidiary network of financial companies is found to be fragmented, and the connections among members of a group are closely knit. Subsidiary networks exhibit a hub-and-spoke structure, with a parent company in the center and subsidiaries around it. This centralized structure is thought to be used by investment companies to pool assets, cut costs, and improve efficiency. Financial institutions also diversify their portfolios by owning various companies not only in the financial sector but also in other sectors. Evidence of interconnections among companies in the financial sector and between financial companies and others is found. The networks formed via interlocks of board members and officers show a high proportion of triples, suggesting ease of reaching others within a short distance—a characteristic of the small-world phenomenon. The finding of an interconnected network, nearly a single-component network, also suggests that the extent of corporate control can be broad. Comments on this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.

Suggested Citation

  • Serafica, Ramonette B. & Tabuga, Aubrey D. & Baino, Madeleine Louise S. & Ruiz, Mark Gerald C., 2024. "Network Structure of Financial Institutions in the Philippines: Insights on Corporate Control and Competition," Discussion Papers DP 2024-17, Philippine Institute for Development Studies.
    • Handle: RePEc:phd:dpaper:dp_2024-17
    DOI: https://doi.org/10.62986/dp2024.17
    as

    Download full text from publisher

    File URL: https://www.pids.gov.ph/publication/discussion-papers/network-structure-of-financial-institutions-in-the-philippines-insights-on-corporate-control-and-competition
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.62986/dp2024.17?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
    ---><---

    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:phd:dpaper:dp_2024-17. 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: Aniceto Orbeta (email available below). General contact details of provider: https://edirc.repec.org/data/pidgvph.html .

    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.