Faculty of Economics and Business

Department of Economic History, Institutions, Politics and World Economy

Research Seminars – Department of Economic History, Institutions, Politics and World Economy

Stefano Ugolini (Sciences Po-Toulouse)

Intermediaries’ Substitutability and Financial Network Resilience: A Hyperstructure Approach

Place: Sala de Recepcions (Faculty of Economics and Business)
Hour: 14:00 hours

Abstract

We propose a new methodology to assess intermediaries’ substitutability in financial networks featuring higher-order structures (credit intermediation chains). We represent the financial network as a hyperstructure and each credit intermediation chain as a hyperedge. This approach allows us to assess how the failure of intermediaries affects network connectivity. We apply this methodology to a unique dataset documenting the structure of the international, sterling money market at the heyday of the first globalization era (1880-1913). Our results reveal that the failure of individual money market actors could only cause limited damage to the network as intermediaries were highly substitutable. These findings suggest that an international financial network without highly systemic nodes can emerge even at a time of global economic integration.