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Structure and temporal change of the credit network between banks and large firms in Japan

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Listed:
  • Yoshi Fujiwara
  • Hideaki Aoyama
  • Yuichi Ikeda
  • Hiroshi Iyetomi
  • Wataru Souma

Abstract

We present a new approach to understanding credit relationships between commercial banks and quoted firms, and with this approach, examine the temporal change in the structure of the Japanese credit network from 1980 to 2005. At each year, the credit network is regarded as a weighted bipartite graph where edges correspond to the relationships and weights refer to the amounts of loans. Reduction in the supply of credit affects firms as debtor, and failure of a firm influences banks as creditor. To quantify the dependency and influence between banks and firms, we propose a set of scores of banks and firms, which can be calculated by solving an eigenvalue problem determined by the weight of the credit network. We found that a few largest eigenvalues and corresponding eigenvectors are significant by using a null hypothesis of random bipartite graphs, and that the scores can quantitatively describe the stability or fragility of the credit network during the 25 years.

Suggested Citation

  • Yoshi Fujiwara & Hideaki Aoyama & Yuichi Ikeda & Hiroshi Iyetomi & Wataru Souma, 2009. "Structure and temporal change of the credit network between banks and large firms in Japan," Papers 0901.2377, arXiv.org, revised May 2009.
  • Handle: RePEc:arx:papers:0901.2377
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    File URL: http://arxiv.org/pdf/0901.2377
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    References listed on IDEAS

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    1. Masanao Aoki, "undated". "Reconstructing Macroeconomics: A Perspective from Statistical Physics and Combinatorial Stochastic Processes," UCLA Economics Online Papers 390, UCLA Department of Economics.
    2. G. De Masi & Y. Fujiwara & M. Gallegati & B. Greenwald & J. E. Stiglitz, 2009. "An Analysis of the Japanese Credit Network," Papers 0901.2384, arXiv.org, revised Nov 2010.
    3. Kano, Masaji & Uchida, Hirofumi & Udell, Gregory F. & Watanabe, Wako, 2011. "Information verifiability, bank organization, bank competition and bank-borrower relationships," Journal of Banking & Finance, Elsevier, vol. 35(4), pages 935-954, April.
    4. Iori, Giulia & De Masi, Giulia & Precup, Ovidiu Vasile & Gabbi, Giampaolo & Caldarelli, Guido, 2008. "A network analysis of the Italian overnight money market," Journal of Economic Dynamics and Control, Elsevier, vol. 32(1), pages 259-278, January.
    5. Uchida, Hirofumi & Udell, Gregory F. & Watanabe, Wako, 2008. "Bank size and lending relationships in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 22(2), pages 242-267, June.
    6. Ogawa, Kazuo & Sterken, Elmer & Tokutsu, Ichiro, 2007. "Why do Japanese firms prefer multiple bank relationship? Some evidence from firm-level data," Economic Systems, Elsevier, vol. 31(1), pages 49-70, March.
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    Cited by:

    1. Alessandro Spelta & Tanya Araujo, 2012. "Interlinkages and structural changes in cross-border liabilities: a network approach," Working Papers Department of Economics 2012/19, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    2. Thiago Christiano Silva & Marcos Soares da Silva & Benjamin Miranda Tabak, 2015. "Liquidity Performance Evaluation of the Brazilian Interbank Market using a Network-Based Approach," Working Papers Series 401, Central Bank of Brazil, Research Department.
    3. Bargigli, Leonardo & Gallegati, Mauro, 2011. "Random digraphs with given expected degree sequences: A model for economic networks," Journal of Economic Behavior & Organization, Elsevier, vol. 78(3), pages 396-411, May.
    4. Delli Gatti, Domenico & Gallegati, Mauro & Greenwald, Bruce & Russo, Alberto & Stiglitz, Joseph E., 2010. "The financial accelerator in an evolving credit network," Journal of Economic Dynamics and Control, Elsevier, vol. 34(9), pages 1627-1650, September.
    5. Spelta, Alessandro & Araújo, Tanya, 2012. "The topology of cross-border exposures: Beyond the minimal spanning tree approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 391(22), pages 5572-5583.
    6. He, Fang & Chen, Xi, 2016. "Credit networks and systemic risk of Chinese local financing platforms: Too central or too big to fail?," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 461(C), pages 158-170.
    7. Araújo, Tanya & Spelta, Alessandro, 2014. "Structural changes in cross-border liabilities: A multidimensional approach," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 394(C), pages 277-287.
    8. repec:eee:finsta:v:35:y:2018:i:c:p:120-135 is not listed on IDEAS
    9. Bargigli, Leonardo & Gallegati, Mauro & Riccetti, Luca & Russo, Alberto, 2014. "Network analysis and calibration of the “leveraged network-based financial accelerator”," Journal of Economic Behavior & Organization, Elsevier, vol. 99(C), pages 109-125.

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