Financial Networks | ScienceGate

During the 2010s, collateralized loan obligations rapidly became a trillion-dollar industry, mirroring the growth profile and peak value of its cousin—collateralized debt obligations—in the 2000s. Yet, despite similarities in product form and growth trajectory, surprisingly little is known about how these markets evolved spatially and relationally. This paper fills that knowledge gap by asking two questions: how did each network adapt to achieve scale at speed across different jurisdictions; and to what extent does the spatial and relational organization of today's collateralized loan obligation structuration network, mirror that of collateralized debt obligations pre-crisis? To answer those questions, we draw on the global financial networks approach, developing our own concept of the networked product to explore the agentic qualities of collateralized debt obligations and collateralized loan obligations—specifically how their technical and regulatory “needs” shape the roles and jurisdictions enrolled in a global financial network. We use social network analysis to map and analyze the evolving spatial and relational organization that nurtured this growth, drawing on data harvested from offering circulars. We find that collateralized debt obligations spread from the US to Europe through a process of transduplication—that similar role-based network relations were reproduced from one regulatory regime to another. We also find a strong correlation between pre-crisis collateralized debt obligation- and post-crisis collateralized loan obligation-global financial networks in both US$- and €-denominations, with often the same network participants involved in each. We conclude by reflecting on the prosaic way financial markets for ostensibly complex products reproduce and the capacity for network stabilities to produce market instabilities.

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DebtRank: Too Central to Fail? Financial Networks, the FED and Systemic Risk

Scientific Reports ◽

10.1038/srep00541 ◽

2012 ◽

Vol 2 (1) ◽

Cited By ~ 359

Author(s):

Stefano Battiston ◽

Michelangelo Puliga ◽

Rahul Kaushik ◽

Paolo Tasca ◽

Guido Caldarelli

Keyword(s):

Systemic Risk ◽

Financial Networks

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Modeling Investment Behavior and Risk Propagation in Financial Networks

SSRN Electronic Journal ◽

10.2139/ssrn.3847443 ◽

2021 ◽

Author(s):

John R. Birge

Keyword(s):

Financial Networks ◽

Investment Behavior

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Inhomogeneous Financial Networks and Contagious Links

SSRN Electronic Journal ◽

10.2139/ssrn.2518840 ◽

2014 ◽

Cited By ~ 1

Author(s):

Hamed Amini ◽

Andreea Minca

Keyword(s):

Financial Networks

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Alibaba and the unpredictability of China’s state-led global financial networks

Dialogues in Human Geography ◽

10.1177/2043820618797745 ◽

2018 ◽

Vol 8 (3) ◽

pp. 276-280 ◽

Cited By ~ 1

Author(s):

Simon XB Zhao

Keyword(s):

The State ◽

Financial Networks ◽

Abstract Theory ◽

Chinese State ◽

At Home

The state plays an important role in the development of financial networks at home and abroad, and the Chinese state is no exception. However, the influence of the state in global financial networks (GFNs) is anything but clear. This commentary offers a response to Töpfer’s theorization of China’s role in state-led GFNs by considering the case of Alibaba in order to address a highly abstract theory. In doing so, I question whether any theory of GFNs that places the state at its center represents a useful, if preliminary, guide to international financial networks, especially when dealing with China.

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