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International trade and financial integration: a weighted network analysis

Author

Listed:
  • Stefano Schiavo
  • Javier Reyes
  • Giorgio Fagiolo

Abstract

The authors analyse patterns of international trade and financial integration using complex network analysis. The combination of both binary and weighted approaches delivers more precise and thorough insights into the topological structure and properties of international trade and financial networks (ITN and IFN). It is found that the ITN is more densely connected than the IFN, while both types of network display a core-periphery structure. This hierarchical organization is more pronounced in financial markets, suggesting that the bulk of trade in financial assets occurs through a handful of countries acting as hubs. High-income countries are better linked and form groups of tightly interconnected nodes. This kind of structure can explain why the recent financial crisis has spread rapidly among advanced countries while reaching emerging markets only in a second phase.

Suggested Citation

  • Stefano Schiavo & Javier Reyes & Giorgio Fagiolo, 2010. "International trade and financial integration: a weighted network analysis," Quantitative Finance, Taylor & Francis Journals, vol. 10(4), pages 389-399.
  • Handle: RePEc:taf:quantf:v:10:y:2010:i:4:p:389-399
    DOI: 10.1080/14697680902882420
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    References listed on IDEAS

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    1. Portes, Richard & Rey, Helene, 2005. "The determinants of cross-border equity flows," Journal of International Economics, Elsevier, vol. 65(2), pages 269-296, March.
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    More about this item

    Keywords

    International integration; International financial markets; Globalization; Complex weighted networks;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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