Network science: a useful tool in economics and finance

Kenett, Dror Y.; Havlin, Shlomo
The increasing frequency and scope of financial crises has made global$\backslash$nfinancial stability one of the major concerns of economic policy and decision$\backslash$nmakers. Under this highly complex environment, supervision of the financial system$\backslash$nhas to be thought of as a systemic task, focusing not only on the strength of the$\backslash$ninstitutions but also on the interdependent relations among them, unraveling the$\backslash$nstructure and dynamic of the system as a whole. In recent years, network science has$\backslash$nemerged as a leading tool for the investigation of complex systems. Here we review$\backslash$nseveral applications of network science in finance and economics, and discuss existing$\backslash$nchallenges and future directions which will substantiate network science as a$\backslash$nkey tool for financial academics, practitioners, and policy and decision makers.
Research areas:
Year:
2015
Type of Publication:
Article
Keywords:
Contagion; Financial networks; Financial stability; Interdependence; Network science; Percolation theory
Journal:
Mind and Society
Volume:
14
Number:
2
Pages:
155-167
ISSN:
1860-1839
DOI:
10.1007/s11299-015-0167-y
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