Title: Connectivity and closeness among international financial institutions: a network theory perspective

Authors: Thierry Warin; William Sanger

Addresses: Department of International Business, HEC Montréal, 3000, Chemin de la Côte-Sainte-Catherine, Montréal (Québec), H3T 2A7, Canada ' Department of Mathematics and Industrial Engineering, Polytechnique Montréal, 2900 Boulevard Edouard-Montpetit, Montréal (Québec), H3T 1J4, Canada; CIRANO, 1130 Sherbrooke Ouest Montréal (Québec), H3A 2M8, Canada

Abstract: This article focuses on connectivity and closeness between financial institutions. Financial institutions are a subset of multinational corporations and play an important role in our modern economies. By studying connectivity and closeness, this article proposes a network theory approach to the notion of systemic risk. Using network theory, we propose to look at potential networks between financial institutions through their boards of directors. Measures of centrality (degree, closeness, betweenness, eigenvalue) and force-directed networks are provided for each country. We built a large sample (43,399 individuals; 2,209 institutions) across 52 countries using Bureau van Dijk's database. We find corporate interlocks showing - to some degree - the level of concentration within the financial system. The main contribution of this article is to show some evidence of small-world properties of the international financial system; the ramifications of this question could be critical, notably in terms of systemic risk.

Keywords: corporate governance; board of directors; network theory; network graphs; board interlocks.

DOI: 10.1504/IJCM.2018.094479

International Journal of Comparative Management, 2018 Vol.1 No.3, pp.225 - 254

Received: 12 Oct 2017
Accepted: 30 Apr 2018
Published online: 03 Sep 2018 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article