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Redundancy of Centrality Measures in Financial Market Infrastructures

Author

Listed:
  • Constanza Martínez-Ventura
  • Ricardo Mariño-Martínez
  • Javier Miguélez-Márquez

Abstract

The concept of centrality has been widely used to monitor systems with a network structure because it allows identifying their most influential participants.This monitoring task can be difficult if the number of system participants is considerably large or if the wide variety of centrality measures currently available produce non-coincident (or mixed) signals. This document uses principal component analysis to evaluate a set of centrality measures calculated for the financial institutions that participate in four financial market infrastructures of Colombia. The results obtained are used to construct general indices of centrality, using the strongest measures of centrality as inputs, and leaving aside those considered redundant. RESUMEN: El concepto de centralidad ha sido ampliamente utilizado para monitorear sistemas con estructura de red ya que permite identificar a los participantes más influyentes. Las labores de monitoreo pueden ser difíciles de realizar si el número de participantes en esos sistemas es considerablemente amplio o si las medidas de centralidad producen resultados no coincidentes o generan señales mixtas. Este documento usa el análisis de componentes principales para evaluar un conjunto de medidas de centralidad calculadas para las instituciones financieras que participan en cuatro infraestructuras de los mercados financieros en Colombia. Los resultados obtenidos son utilizados para construir índices generales de centralidad, utilizando como insumos las medidas de centralidad más fuertes y dejando de lado aquellas consideradas redundantes.

Suggested Citation

  • Constanza Martínez-Ventura & Ricardo Mariño-Martínez & Javier Miguélez-Márquez, 2022. "Redundancy of Centrality Measures in Financial Market Infrastructures," Borradores de Economia 1206, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:1206
    DOI: 10.32468/be.1206
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    References listed on IDEAS

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    More about this item

    Keywords

    centrality; principal component analysis; redundancy analysis; clustering analysis; centralidad; análisis de componentes principales; análisis de redundancia; análisis de clustering;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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