Here is an outstanding summary of the basic concepts and recent history of network analysis, with examples ranging widely (teams, social networks, firms, industries, economies, etc.), authored by CA Hidalgo, an associate professor at MIT’s Media Lab. Full text here, and other papers here.
After reading it through, I’m left hungry for more intuitive user-friendly tools for capturing and visualizing networks. The consulting industry needs a network viz tool that links up with (or gets embedded in!) PowerPoint and other slide production software as seamlessly as think-cell. Such technology would be particularly valuable in large-scale institutional re-design projects in the public sector (all the more so insofar as they concern key public-private feedbacks in the policymaking process).
I wonder who’s up for the task… (?)
The following was submitted to fulfill the requirements of coursework in finance with Professor Jacque at The Fletcher School at Tufts and coursework in networks and complexity with Professor Hidalgo at Harvard Kennedy School of Government. The network visualizations were created using gephi, an open source graph viz platform that rocks my world.
What implications has the U.S. sub-prime mortgage crisis had for international financing? Are banks more or less exposed to systemic risk in the global financial system now than before? This paper explores recent developments in the web of cross-border bank exposures and, treating these exposures as a “directed network”, investigates the changing statistical measures of network topology. These measures suggest a stark departure from historical patterns of globalization in banking. Historically, trends toward higher connectivity and diversified exposure were continuous and unhampered by disturbances or crises between 1985 and 2006. More recently, these trends have been substituted for an apparently steady state of constant connectivity, with lower levels of average exposure, lower bank appetites for risky lending to less developed countries, and greater concentration on lending between “culturally similar” countries. Looking forward, key implications of this departure include lower levels of systemic risk, but also lower levels of efficiency in international financial markets.
Full text: 0420 – Exposures Network – Fabyanske – FINAL
PowerPoint: Bank Exposures Network Analysis