Interlocking directorates and different power forms: An explorative analysis in the Italian context

The purpose of the present paper is twofold. The first is to update the contribution by Drago et al. (2011) about cross-shareholdings and interlocking directorates in Italian listed companies (FTSE MIB) to 31 December 2016 and to reinforce theory of enlarged collusion. The second is to find how interlocking directorates can contribute to understanding the power structure. By using the social network analysis, we map the network structure of interlocking boards and employ centrality measures like degree, eigenvector and betweenness centrality along with the network density and average degree. We interpret eigenvector centrality as a measure of “effective power” of the connections because it can be seen as a weighted sum of not only direct connections but indirect connections, while betweenness centrality as a measure of “potential power” because it is a proxy of the volume of information that passes through the nodes. In this way, we provide a framework for selecting Italian firms with effective and potential power – around whom interactions and processes can be traced and analysed. In addition, we find that the position assumed by the controlling group of the Mediobanca Galaxy is definitely downsized.

Cross-Shareholdings Structural Characteristic and Evolution Analysis Based on Complex Network

This study depicts the network morphology of firms which establish ties through cross-shareholdings by the theory of complex network analysis method. It calculates some complex network properties of the cross-shareholdings network and analyzes the evolution law of network structure in nearly 7 years. The network clearly displays small world properties and scale-free properties. The cross-shareholdings network average path length and clustering coefficient is with a small amplitude fluctuation; the network structure is relatively stable. Such a study is of practical importance and could provide opportunities for policy makers to improve the performance of the cross-shareholdings network.

Low returns drive Japanese megabanks further overseas

Subject The overseas activities of Japan's megabanks. Significance After two decades of global retreat, Japan's banks are once again advancing, after abundant liquidity and strong capital ratios allowed them to exploit post-financial crisis retrenchment by European and US competitors. Overseas activities now account for over 30% of their gross profits. However, they include higher-risk activities such as acquisition and leveraged lending, creating additional vulnerabilities for the longer-term financial stability of Japan's banking sector. Impacts The banks aim to fund offshore foreign-currency lending from foreign currency retail deposits, not wholesale funding and swap markets. The megabanks aim to expand investment banking, where the potential rewards exceed those of lending to individual and corporate customers. Japan's banks and their listed corporate customers will adopt new corporate governance rules that discourage of cross-shareholdings. Mizuho and SMFG will seek to emulate through acquisition the success of MUFG's California-based MUFG Union Bank.