The Analysis of Bankruptcies’ Succession using Inter-bank Transactional Network Model

Abstract

In order to avoid the risk of bankruptcies’ succession in financial institutions, research on financial transaction networks on systemic risks has been active globally, mainly in Europe. In this research, we propose a new strategy to reduce the bankruptcies’ succession at minimum cost by constructing an inter-bank transactional network model composed of Erdos-Renyi network and Barabasi-Albert Model considering network property. As a result of the verification using agent-based modeling, it is verified that financial assistance implemented to stop the bankruptcies’succession will eventually increase the succession, andWe clarified the importance of selection of financial institution implementing financial injection. We also show that eXtreme Gradient Boosting is effective as a method of selecting financial institutions and propose new strategies to improve accuracy.This is a major economic effect in the sense that it proposes the risk indicator that aims to improve the certainty of the investment of public money by analyzing the properties of the transaction network analysis of financial institutions.