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Hierarchical financial structures with money cascade

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  • Mahendra K. Verma

Abstract

In this paper we show similarities between turbulence and financial systems. Motivated by similarities between the two systems, we construct a multiscale model for hierarchical financial structures that exhibits a constant cascade of wealth from large financial entities to small financial entities. According to our model, large and intermediate scale financial institutions have a power law distribution. However, the wealth distribution is Maxwellian at individual scales.

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  • Mahendra K. Verma, 2019. "Hierarchical financial structures with money cascade," Papers 1903.00313, arXiv.org.
    • Handle: RePEc:arx:papers:1903.00313
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    File URL: http://arxiv.org/pdf/1903.00313
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