The determinants of the individual nestedness contribution in financial systems

Nestedness is one of the most pervasive and studied patterns observed in complex networks and refers to a hierarchical organization of the network. In this paper, we assess the determinants of the individual nestedness contribution (INC) in financial systems. To perform this task, we rely on data from two Brazilian financial networks: the bank-firm credit network and the interbank network. We computed the nestedness of the networks, as well as the INC for each node. The main determinants of the INC in the bank-firm network are the degree and the core number. In the interbank network, the INC of lending banks is mainly driven by their degree, while the INC of borrowing banks has not a clear main determinant.Copyright@ 2023 EPLA

Automated summary

In this paper, the determinants of individual nestedness contribution (INC) in financial systems were assessed using data from two Brazilian financial networks. The study found that in the bank-firm credit network, the main determinants of INC were degree and core number, while in the interbank network, the INC of lending banks was mainly driven by their degree and there was no clear main determinant for borrowing banks' INC.