IDEAS home Printed from https://ideas.repec.org/p/arx/papers/1710.10143.html
   My bibliography  Save this paper

From Ecology to Finance (and Back?): Recent Advancements in the Analysis of Bipartite Networks

Author

Listed:
  • Mika J. Straka
  • Guido Caldarelli
  • Tiziano Squartini
  • Fabio Saracco

Abstract

Bipartite networks provide an insightful representation of many systems, ranging from mutualistic networks of species interactions to investment networks in finance. The analysis of their topological structures has revealed the ubiquitous presence of properties which seem to characterize many - apparently different - systems. Nestedness, for example, has been observed in plants-pollinator as well as in country-product trade networks. This has raised questions about the significance of these patterns, which are often believed to constitute a genuine signature of self-organization. Here, we review several methods that have been developed for the analysis of such evidence. Due to the interdisciplinary character of complex networks, tools developed in one field, for example ecology, can greatly enrich other areas of research, such as economy and finance, and vice versa. With this in mind, we briefly review several entropy-based bipartite null models that have been recently proposed and discuss their application to several real-world systems. The focus on these models is motivated by the fact that they show three very desirable features: analytical character, general applicability and versatility. In this respect, entropy-based methods have been proven to perform satisfactorily both in providing benchmarks for testing evidence-based null hypotheses and in reconstructing unknown network configurations from partial information. On top of that, entropy-based models have been successfully employed to analyze ecological as well as economic systems, thus representing an ideal, interdisciplinary tool to approach the study of bipartite complex systems. [...]

Suggested Citation

  • Mika J. Straka & Guido Caldarelli & Tiziano Squartini & Fabio Saracco, 2017. "From Ecology to Finance (and Back?): Recent Advancements in the Analysis of Bipartite Networks," Papers 1710.10143, arXiv.org.
  • Handle: RePEc:arx:papers:1710.10143
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/1710.10143
    File Function: Latest version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Marco Bardoscia & Stefano Battiston & Fabio Caccioli & Guido Caldarelli, 2016. "Pathways towards instability in financial networks," Papers 1602.05883, arXiv.org, revised Feb 2017.
    2. Rama Cont & Lakshithe Wagalath, 2016. "Fire Sales Forensics: Measuring Endogenous Risk," Mathematical Finance, Wiley Blackwell, vol. 26(4), pages 835-866, October.
    3. Krause, Andreas & Giansante, Simone, 2012. "Interbank lending and the spread of bank failures: A network model of systemic risk," Journal of Economic Behavior & Organization, Elsevier, vol. 83(3), pages 583-608.
    4. Stanislao Gualdi & Giulio Cimini & Kevin Primicerio & Riccardo Di Clemente & Damien Challet, 2016. "Statistically validated network of portfolio overlaps and systemic risk," Papers 1603.05914, arXiv.org, revised Sep 2016.
    5. Andrea Zaccaria & Matthieu Cristelli & Andrea Tacchella & Luciano Pietronero, 2014. "How the Taxonomy of Products Drives the Economic Development of Countries," PLOS ONE, Public Library of Science, vol. 9(12), pages 1-17, December.
    6. Orazio Angelini & Matthieu Cristelli & Andrea Zaccaria & Luciano Pietronero, 2017. "The complex dynamics of products and its asymptotic properties," PLOS ONE, Public Library of Science, vol. 12(5), pages 1-20, May.
    7. Cesar A. Hidalgo & Ricardo Hausmann, 2009. "The Building Blocks of Economic Complexity," Papers 0909.3890, arXiv.org.
    8. Arinaminpathy, Nimalan & Kapadia, Sujit & May, Robert, 2012. "Size and complexity in model financial systems," Bank of England working papers 465, Bank of England.
    9. Gai, Prasanna & Kapadia, Sujit, 2010. "Contagion in financial networks," Bank of England working papers 383, Bank of England.
    10. Caccioli, Fabio & Shrestha, Munik & Moore, Cristopher & Farmer, J. Doyne, 2014. "Stability analysis of financial contagion due to overlapping portfolios," Journal of Banking & Finance, Elsevier, vol. 46(C), pages 233-245.
    11. Domenico Di Gangi & Fabrizio Lillo & Davide Pirino, 2015. "Assessing systemic risk due to fire sales spillover through maximum entropy network reconstruction," Papers 1509.00607, arXiv.org, revised Jul 2018.
    12. Matthieu Cristelli & Andrea Gabrielli & Andrea Tacchella & Guido Caldarelli & Luciano Pietronero, 2013. "Measuring the Intangibles: A Metrics for the Economic Complexity of Countries and Products," PLOS ONE, Public Library of Science, vol. 8(8), pages 1-20, August.
    13. Andrei Shleifer & Robert Vishny, 2011. "Fire Sales in Finance and Macroeconomics," Journal of Economic Perspectives, American Economic Association, vol. 25(1), pages 29-48, Winter.
    14. G. Bonanno & G. Caldarelli & F. Lillo & S. Micciché & N. Vandewalle & R. Mantegna, 2004. "Networks of equities in financial markets," The European Physical Journal B: Condensed Matter and Complex Systems, Springer;EDP Sciences, vol. 38(2), pages 363-371, March.
    15. Samir Suweis & Filippo Simini & Jayanth R. Banavar & Amos Maritan, 2013. "Emergence of structural and dynamical properties of ecological mutualistic networks," Nature, Nature, vol. 500(7463), pages 449-452, August.
    16. Furceri, Davide & Mourougane, Annabelle, 2012. "The effect of financial crises on potential output: New empirical evidence from OECD countries," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 822-832.
    17. Matteo Barigozzi & Giorgio Fagiolo & Diego Garlaschelli, 2009. "Multinetwork of international trade: A commodity-specific analysis," Papers 0908.1879, arXiv.org, revised Jun 2010.
    18. Franklin Allen & Douglas Gale, 2000. "Financial Contagion," Journal of Political Economy, University of Chicago Press, vol. 108(1), pages 1-33, February.
    19. Marco Dueñas & Giorgio Fagiolo, 2013. "Modeling the International-Trade Network: a gravity approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 8(1), pages 155-178, April.
    20. Richard J Williams, 2011. "Biology, Methodology or Chance? The Degree Distributions of Bipartite Ecological Networks," PLOS ONE, Public Library of Science, vol. 6(3), pages 1-7, March.
    21. Orazio Angelini & Matthieu Cristelli & Andrea Zaccaria & Luciano Pietronero, 2016. "The complex dynamics of products and its asymptotic properties," Papers 1610.00274, arXiv.org, revised May 2017.
    22. Fabio Saracco & Riccardo Di Clemente & Andrea Gabrielli & Tiziano Squartini, 2015. "Detecting early signs of the 2007-2008 crisis in the world trade," Papers 1508.03533, arXiv.org, revised Jul 2016.
    23. Rama Cont & Lakshithe Wagalath, 2012. "Fire Sales Forensics: Measuring Endogenous Risk," Working Papers hal-00697224, HAL.
    24. Rama Cont & Lakshithe Wagalath, 2016. "Fire Sales Forensics: Measuring Endogenous Risk," Post-Print hal-03003955, HAL.
    25. Ricardo Hausmann & César Hidalgo, 2011. "The network structure of economic output," Journal of Economic Growth, Springer, vol. 16(4), pages 309-342, December.
    26. Emanuele Pugliese & Giulio Cimini & Aurelio Patelli & Andrea Zaccaria & Luciano Pietronero & Andrea Gabrielli, 2017. "Unfolding the innovation system for the development of countries: co-evolution of Science, Technology and Production," Papers 1707.05146, arXiv.org, revised Dec 2017.
    27. Matthieu Cristelli & Andrea Tacchella & Luciano Pietronero, 2015. "The Heterogeneous Dynamics of Economic Complexity," PLOS ONE, Public Library of Science, vol. 10(2), pages 1-15, February.
    28. Dror Y. Kenett & Sary Levy-Carciente & Adam Avakian & H. Eugene Stanley & Shlomo Havlin, 2015. "Dynamical Macroprudential Stress Testing Using Network Theory," Working Papers 15-12, Office of Financial Research, US Department of the Treasury.
    29. Emanuele Pugliese & Andrea Zaccaria & Luciano Pietronero, 2014. "On the convergence of the Fitness-Complexity Algorithm," Papers 1410.0249, arXiv.org, revised Dec 2014.
    30. repec:hal:spmain:info:hdl:2441/9771 is not listed on IDEAS
    31. Fabio Saracco & Mika J. Straka & Riccardo Di Clemente & Andrea Gabrielli & Guido Caldarelli & Tiziano Squartini, 2016. "Inferring monopartite projections of bipartite networks: an entropy-based approach," Papers 1607.02481, arXiv.org, revised May 2017.
    32. Levy-Carciente, Sary & Kenett, Dror Y. & Avakian, Adam & Stanley, H. Eugene & Havlin, Shlomo, 2015. "Dynamical macroprudential stress testing using network theory," Journal of Banking & Finance, Elsevier, vol. 59(C), pages 164-181.
    33. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
    34. Fabio Saracco & Riccardo Di Clemente & Andrea Gabrielli & Tiziano Squartini, 2015. "Randomizing bipartite networks: the case of the World Trade Web," Papers 1503.05098, arXiv.org, revised Jun 2015.
    35. Hong, Yili, 2013. "On computing the distribution function for the Poisson binomial distribution," Computational Statistics & Data Analysis, Elsevier, vol. 59(C), pages 41-51.
    36. Gian Marco Palamara & Vinko Zlatić & Antonio Scala & Guido Caldarelli, 2011. "Population Dynamics On Complex Food Webs," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 14(04), pages 635-647.
    37. Stefano Allesina & Si Tang, 2012. "Stability criteria for complex ecosystems," Nature, Nature, vol. 483(7388), pages 205-208, March.
    38. Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
    39. Federica Cerina & Zhen Zhu & Alessandro Chessa & Massimo Riccaboni, 2014. "World Input-Output Network," Papers 1407.0225, arXiv.org.
    40. D. Garlaschelli & M. I. Loffredo, 2004. "Fitness-dependent topological properties of the World Trade Web," Papers cond-mat/0403051, arXiv.org, revised Oct 2004.
    41. Larry Eisenberg & Thomas H. Noe, 2001. "Systemic Risk in Financial Systems," Management Science, INFORMS, vol. 47(2), pages 236-249, February.
    42. Diego Garlaschelli & Guido Caldarelli & Luciano Pietronero, 2003. "Universal scaling relations in food webs," Nature, Nature, vol. 423(6936), pages 165-168, May.
    43. Ugo Bastolla & Miguel A. Fortuna & Alberto Pascual-García & Antonio Ferrera & Bartolo Luque & Jordi Bascompte, 2009. "The architecture of mutualistic networks minimizes competition and increases biodiversity," Nature, Nature, vol. 458(7241), pages 1018-1020, April.
    44. Marco Bardoscia & Stefano Battiston & Fabio Caccioli & Guido Caldarelli, 2017. "Pathways towards instability in financial networks," Nature Communications, Nature, vol. 8(1), pages 1-7, April.
    45. Phillip P. A. Staniczenko & Jason C. Kopp & Stefano Allesina, 2013. "The ghost of nestedness in ecological networks," Nature Communications, Nature, vol. 4(1), pages 1-6, June.
    46. Alex James & Jonathan W. Pitchford & Michael J. Plank, 2012. "Disentangling nestedness from models of ecological complexity," Nature, Nature, vol. 487(7406), pages 227-230, July.
    47. Tiziano Squartini & Assaf Almog & Guido Caldarelli & Iman van Lelyveld & Diego Garlaschelli & Giulio Cimini, 2016. "Enhanced capital-asset pricing model for the reconstruction of bipartite financial networks," Papers 1606.07684, arXiv.org, revised Sep 2017.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tiziano Squartini & Guido Caldarelli & Giulio Cimini & Andrea Gabrielli & Diego Garlaschelli, 2018. "Reconstruction methods for networks: the case of economic and financial systems," Papers 1806.06941, arXiv.org.
    2. Sadamori Kojaku & Giulio Cimini & Guido Caldarelli & Naoki Masuda, 2018. "Structural changes in the interbank market across the financial crisis from multiple core-periphery analysis," Papers 1802.05139, arXiv.org.
    3. Marco Bardoscia & Paolo Barucca & Stefano Battiston & Fabio Caccioli & Giulio Cimini & Diego Garlaschelli & Fabio Saracco & Tiziano Squartini & Guido Caldarelli, 2021. "The Physics of Financial Networks," Papers 2103.05623, arXiv.org.
    4. Ramadiah, Amanah & Caccioli, Fabio & Fricke, Daniel, 2020. "Reconstructing and stress testing credit networks," Journal of Economic Dynamics and Control, Elsevier, vol. 111(C).
    5. Stanislao Gualdi & Giulio Cimini & Kevin Primicerio & Riccardo Di Clemente & Damien Challet, 2016. "Statistically validated network of portfolio overlaps and systemic risk," Papers 1603.05914, arXiv.org, revised Sep 2016.
    6. Ramadiah, Amanah & Caccioli, Fabio & Fricke, Daniel, 2019. "Reconstructing and stress testing credit networks," LSE Research Online Documents on Economics 118938, London School of Economics and Political Science, LSE Library.
    7. Wiersema, Garbrand & Kleinnijenhuis, Alissa M. & Wetzer, Thom & Farmer, J. Doyne, 2023. "Scenario-free analysis of financial stability with interacting contagion channels," Journal of Banking & Finance, Elsevier, vol. 146(C).
    8. Bernardo Caldarola & Dario Mazzilli & Lorenzo Napolitano & Aurelio Patelli & Angelica Sbardella, 2023. "Economic complexity and the sustainability transition: A review of data, methods, and literature," Papers 2308.07172, arXiv.org, revised Mar 2024.
    9. Brandi, Giuseppe & Di Clemente, Riccardo & Cimini, Giulio, 2018. "Epidemics of liquidity shortages in interbank markets," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 507(C), pages 255-267.
    10. Valentina Macchiati & Giuseppe Brandi & Tiziana Di Matteo & Daniela Paolotti & Guido Caldarelli & Giulio Cimini, 2022. "Systemic liquidity contagion in the European interbank market," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 17(2), pages 443-474, April.
    11. Giulia Poce & Giulio Cimini & Andrea Gabrielli & Andrea Zaccaria & Giuditta Baldacci & Marco Polito & Mariangela Rizzo & Silvia Sabatini, 2016. "What do central counterparties default funds really cover? A network-based stress test answer," Papers 1611.03782, arXiv.org.
    12. Shi, Qing & Sun, Xiaoqi & Jiang, Yile, 2022. "Concentrated commonalities and systemic risk in China's banking system: A contagion network approach," International Review of Financial Analysis, Elsevier, vol. 83(C).
    13. Freire, Clovis, 2019. "Economic diversification: A model of structural economic dynamics and endogenous technological change," Structural Change and Economic Dynamics, Elsevier, vol. 49(C), pages 13-28.
    14. Zhuo-Ming Ren & An Zeng & Yi-Cheng Zhang, 2020. "Bridging nestedness and economic complexity in multilayer world trade networks," Palgrave Communications, Palgrave Macmillan, vol. 7(1), pages 1-8, December.
    15. Christoph Aymanns & J. Doyne Farmer & Alissa M. Keinniejenhuis & Thom Wetzer, 2017. "Models of Financial Stability and their Application in Stress Tests," Working Papers on Finance 1805, University of St. Gallen, School of Finance.
    16. Braouezec, Yann & Wagalath, Lakshithe, 2019. "Strategic fire-sales and price-mediated contagion in the banking system," European Journal of Operational Research, Elsevier, vol. 274(3), pages 1180-1197.
    17. Lin, Li & Guo, Xin-Yu, 2019. "Identifying fragility for the stock market: Perspective from the portfolio overlaps network," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 62(C), pages 132-151.
    18. Fabio Saracco & Riccardo Di Clemente & Andrea Gabrielli & Luciano Pietronero, 2015. "From Innovation to Diversification: A Simple Competitive Model," PLOS ONE, Public Library of Science, vol. 10(11), pages 1-19, November.
    19. Orazio Angelini & Tiziana Di Matteo, 2018. "Complexity of products: the effect of data regularisation," Papers 1808.08249, arXiv.org, revised Oct 2018.
    20. Alessandro Ferracci & Giulio Cimini, 2021. "Systemic risk in interbank networks: disentangling balance sheets and network effects," Papers 2109.14360, arXiv.org, revised Sep 2022.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:arx:papers:1710.10143. 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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    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.