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Financial Networks
A financial network is a concept describing any collection of financial entities (such as payment card industry, payment card companies, firms, banks and financial transaction processing) and the links between them, ideally through direct transactions or the ability to mediate a transaction. A common example of a financial network link is security holdings (e.g. stock of publicly traded companies), where a firm's ownership of stock would represent a link between the capital stock, stock and the firm. In network science terms, financial networks are composed of financial node (networking), nodes, where nodes represent financial institutions or participants, and of edges, where edges represent formal or informal relationships between nodes (i.e. stock or bond ownership). History The concept and use of financial networks has emerged in response to the observation that modern financial systems exhibit a high degree of interdependence. Globalization has magnified the level of financial i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Payment Card Industry
The payment card industry (PCI) denotes the debit, credit, prepaid, e-purse, ATM, and POS cards and associated businesses. Overview The payment card industry consists of all the organizations which store, process and transmit cardholder data, most notably for debit cards and credit cards. The security standards are developed by the Payment Card Industry Security Standards Council which develops the Payment Card Industry Data Security Standards used throughout the industry. Individual card brands establish compliance requirements that are used by service providers and have their own compliance programs. Major card brands include American Express, Discover Card, JCB, Mastercard, Mir, RuPay, UnionPay and Visa. Most companies use member banks that connect and accept transactions from the card brands. Not all card brands use member banks, like American Express, these instead act as their own bank. , the United States uses a magnetic stripe on a card to process transactio ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Stock Correlation Networks
A stock correlation network is a type of financial network based on stock price correlation used for observing, analyzing and predicting the stock market dynamics. Background In the last decade, financial networks have attracted more attention from the research community. A study on company ownership based network showed a power law distribution with majority of companies controlled by small number of people. Another study focused on board of directors where the network was created between companies if represented by the same member on board. The board membership network thus created resulted in a power law with small number of board members representing large number of companies. Several studies have proposed network based models for studying the stock correlation network. Stock correlation network has proven its efficacy in predicting market movements. Chakrabortia and Onella showed that the average distance between the stocks can be a significant indicator of market dynamics. Th ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Systemically Important Financial Institution
A systemically important financial institution (SIFI) is a bank, insurance company, or other financial institution whose failure might trigger a financial crisis. They are colloquially referred to as "too big to fail". As the 2008 financial crisis unfolded, the international community moved to protect the global financial system through preventing the failure of SIFIs, or, if one did fail, limiting the adverse effects of its failure. In November 2011, the Financial Stability Board (FSB) published a list of global systemically important financial institutions (G-SIFIs). In November 2010, the Basel Committee on Banking Supervision (BCBS) introduced new guidance (known as Basel III) that also specifically target SIFIs. The focus of the Basel III guidance is to increase bank capital requirements and to introduce capital surcharges for G-SIFIs. However, some economists warned in 2012 that the tighter Basel III capital regulation, which is primarily based on risk-weighted assets, ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Too Big To Fail
"Too big to fail" (TBTF) is a theory in banking and finance that asserts that certain corporations, particularly financial institutions, are so large and so interconnected with an economy that their failure would be disastrous to the greater economic system, and therefore should be supported by government when they face potential failure. The colloquial term "too big to fail" was popularized by U.S. Congressman Stewart McKinney in a 1984 Congressional hearing, discussing the Federal Deposit Insurance Corporation's intervention with Continental Illinois. The term had previously been used occasionally in the press, and similar thinking had motivated earlier bank bailouts. The term emerged as prominent in public discourse following the 2008 financial crisis. Critics see the policy as counterproductive and that large banks or other institutions should be left to fail if their risk management is not effective. Some critics, such as economist Alan Greenspan, believe that such lar ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cascading Failure
A cascading failure is a failure in a system of interconnection, interconnected parts in which the failure of one or few parts leads to the failure of other parts, growing progressively as a result of positive feedback. This can occur when a single part fails, increasing the probability that other portions of the system fail. Such a failure may happen in many types of systems, including power transmission, computer networking, finance, transportation systems, organisms, the human body, and ecosystems. Cascading failures may occur when one part of the system fails. When this happens, other parts must then compensate for the failed component. This in turn overloads these nodes, causing them to fail as well, prompting additional nodes to fail one after another. In power transmission Cascading failure is common in power grids when one of the elements fails (completely or partially) and shifts its load to nearby elements in the system. Those nearby elements are then pushed beyond t ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Systemic Risk
In finance, systemic risk is the risk of collapse of an entire financial system or entire market, as opposed to the risk associated with any one individual entity, group or component of a system, that can be contained therein without harming the entire system.Banking and currency crises and systemic risk George G. Kaufman (World Bank), Internet Archive It can be defined as "financial ''system'' instability, potentially catastrophic, caused or exacerbated by idiosyncratic events or conditions in financial intermediaries". It refers to the risks imposed by ''interlinkages'' and ''interdependencies'' in a system or market, where the failure of a single entity or cluster of entities can cause a casca ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Centrality
In graph theory and network analysis, indicators of centrality assign numbers or rankings to nodes within a graph corresponding to their network position. Applications include identifying the most influential person(s) in a social network, key infrastructure nodes in the Internet or urban networks, super-spreaders of disease, and brain networks. Centrality concepts were first developed in social network analysis, and many of the terms used to measure centrality reflect their sociological origin.Newman, M.E.J. 2010. ''Networks: An Introduction.'' Oxford, UK: Oxford University Press. Definition and characterization of centrality indices Centrality indices are answers to the question "What characterizes an important vertex?" The answer is given in terms of a real-valued function on the vertices of a graph, where the values produced are expected to provide a ranking which identifies the most important nodes. The word "importance" has a wide number of meanings, leading to many d ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Multidimensional Network
In network theory, multidimensional networks, a special type of ''multilayer network'', are networks with multiple kinds of relations. Increasingly sophisticated attempts to model real-world systems as multidimensional networks have yielded valuable insight in the fields of social network analysis, economics, urban and international transport network, transport, ecological network, ecology, psychology, medicine, biology, commerce, climatology, physics, computational neuroscience, operations management, and finance. Terminology The rapid exploration of complex networks in recent years has been dogged by a lack of standardized naming conventions, as various groups use overlapping and contradictory terminology to describe specific network configurations (e.g., multiplex, multilayer, multilevel, multidimensional, multirelational, interconnected). To fully leverage the dataset information on the directional nature of the communications, some authors consider only direct networks withou ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Cascades In Financial Networks
Cascades in financial networks are situations in which the failure of one financial institution causes a cascading failure in another member of the financial network. In an extreme this can cause failure of the whole network in what is known as systemic failure. It can be defined as the discontinuous value loss (e.g. default) of the organization caused by the discontinuous value loss of another organization in the network. There are three conditions required for a cascade, there are; a failure, contagion and interconnection.Elliott, M., Golub, B. and Jackson, M. O. 2014"Financial Networks and Contagion" ''The American Economic Review'', 104(10):3115-3153. Diversification and integration in the financial network determine whether and how failures will spread. Using the data on cross-holdings of organizations and on the value of organizations, it is possible to construct the dependency matrix to simulate cascades in the financial network. Diversification and integration Elliot ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Order Book (trading)
An order book is the list of orders (manual or electronic) that a trading venue (in particular stock exchanges) uses to record the interest of buyers and sellers in a particular financial instrument. A matching engine uses the book to determine which orders can be fully or partially executed. In securities trading In securities trading, an order book contains the list of buy orders and the list of sell orders. For each entry it must keep among others, some means of identifying the party (even if this identification is obscured, as in a dark pool), the number of securities and the price that the buyer or seller are bidding/asking for the particular security. Price levels When several orders contain the same price, they are referred as a price level, meaning that if, say, a bid comes at that price level, all the sell orders on that price level could potentially fulfill that. Crossed book When the order book is part of a matching engine, orders are matched as the interest of buy ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Agent-based Model
An agent-based model (ABM) is a computational model for simulating the actions and interactions of autonomous agents (both individual or collective entities such as organizations or groups) in order to understand the behavior of a system and what governs its outcomes. It combines elements of game theory, complex systems, emergence, computational sociology, multi-agent systems, and evolutionary programming. Monte Carlo methods are used to understand the stochasticity of these models. Particularly within ecology, ABMs are also called individual-based models (IBMs). A review of recent literature on individual-based models, agent-based models, and multiagent systems shows that ABMs are used in many scientific domains including biology, ecology and social science. Agent-based modeling is related to, but distinct from, the concept of multi-agent systems or multi-agent simulation in that the goal of ABM is to search for explanatory insight into the collective behavior of agents ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Interbank Networks
An interbank network, also known as an ATM consortium or ATM network, is a computer networking, computer network that enables ATM cards issued by a financial institution that is a member of the network to be used to perform ATM transactions through automated teller machine, ATMs that belong to another member of the network. However, the functions which may be performed at the network ATM vary. For example, special services, such as the purchase of mobile phone airtime, may be available to own-bank but not to network ATM cardholders. Furthermore, the network ATM owner may charge a fee for use of network cards (in addition to any fees imposed by the own-bank). Interbank networks enable ATM cardholders to have access to ATMs of other banks that are members of the network when their own bank's ATM is unavailable. This is especially convenient for travelers traveling abroad, where multinational interbank networks, like Plus (interbank network), Plus or Cirrus (interbank network), C ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
