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Social networks in the global banking sector

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  • Houston, Joel F.
  • Lee, Jongsub
  • Suntheim, Felix

Abstract

We show that banks with shared social connections partner more often in the global syndicated loan market and that central banks in the network play dominant roles in various interbank transactions, indicating that social connections facilitate business connections. However, more centralized banks in the network also contribute significantly to the global systemic risk. Moreover, we find the soft information generated by social networks is particularly valuable when potential partners operate under different accounting and regulatory standards. Finally, we show that the recent banking crisis significantly limited the positive soft information effects of social networks in the global banking system.

Suggested Citation

  • Houston, Joel F. & Lee, Jongsub & Suntheim, Felix, 2018. "Social networks in the global banking sector," Journal of Accounting and Economics, Elsevier, vol. 65(2), pages 237-269.
  • Handle: RePEc:eee:jaecon:v:65:y:2018:i:2:p:237-269
    DOI: 10.1016/j.jacceco.2017.11.006
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    More about this item

    Keywords

    Top global banks; Director social networks; Pairwise connection; Network centrality; Loan syndication; Systemic risk; IFRS; Bank regulation; Financial crisis;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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