in ’t Veld, D., van der Leij, M. and Hommes, C. (2020) The Formation of a Core-Periphery Structure in Heterogeneous Financial Networks. Journal of Economic Dynamics and Control, 119, Article 103972.
https://doi.org/10.1016/j.jedc.2020.103972

has been cited by the following article:

• TITLE: Sparsity and Its Impact on Financial Network with Complete Core-Periphery Structure

  AUTHORS: Elaine Yongshi Jie, Yue Ma

  KEYWORDS: Network Sparsity, Network Impact, Complete Core-Periphery Structure

  JOURNAL NAME: Journal of Mathematical Finance, Vol.15 No.2, May 9, 2025

  ABSTRACT: This paper theoretically investigates network sparsity and its impact. We focus on a specific topology of the network, i.e., the network with core-periphery structures, which is a widely studied financial network structure. It is crucial to understand how changes in sparsity influence network impact. For example, reducing the sparsity of a banking network can offer significant advantages. Upgrading strategically a local bank branch to a regional headquarters improves the connectedness among regional branches. Similarly, reducing the overall sparsity of a banking network by strategically merging two financial networks into one can create substantial potential impacts on banking operations. We derive closed-form solutions that quantify links between sparsity and its impact on financial networks with complete core-periphery structures. We prove that reducing sparsity increases impacts on networks with complete core-periphery components through two sparsity reduction strategies. We further validate other impact measures through simulations.