Evolution of Controllability in Interbank Networks

• Published in: Scientific reports Vol. 3; no. 1; p. 1626
• Main Authors: Delpini, Danilo, Battiston, Stefano, Riccaboni, Massimo, Gabbi, Giampaolo, Pammolli, Fabio, Caldarelli, Guido
• Format: Journal Article
• Language: English
• Published: London Nature Publishing Group UK 09.04.2013; Nature Publishing Group
• Subjects: 639/705/1041; 639/705/1042; 639/766/25; 639/766/408/530; Banking industry; Central banks; Funding; Humanities and Social Sciences; multidisciplinary; Nodes; Regulation of financial institutions; Science; Statistical physics
• ISSN: 2045-2322; 2045-2322
• DOI: 10.1038/srep01626

The Statistical Physics of Complex Networks has recently provided new theoretical tools for policy makers. Here we extend the notion of network controllability to detect the financial institutions, i.e. the drivers, that are most crucial to the functioning of an interbank market. The system we investigate is a paradigmatic case study for complex networks since it undergoes dramatic structural changes over time and links among nodes can be observed at several time scales. We find a scale-free decay of the fraction of drivers with increasing time resolution, implying that policies have to be adjusted to the time scales in order to be effective. Moreover, drivers are often not the most highly connected “hub” institutions, nor the largest lenders, contrary to the results of other studies. Our findings contribute quantitative indicators which can support regulators in developing more effective supervision and intervention policies.