A Study Of Risk Contagion In Selected Global Equity Markets Based On A Complex Network Contagion Model

With the acceleration of global economic integration,economic exchanges and cooperation among countries have become increasingly close,forming a tight unity.The destructive impact of the financial crisis was not limited to the market where it broke out,but spread rapidly across the globe,triggering the spread of financial risks and eventually leading to the global financial crisis.The stock market is an important vane of economic development,and it can reflect the changes of economic situation in time,therefore,it is of great significance to conduct an in-depth study on it.In the past 20 years,the global financial crisis has made people realize that the global stock market is like a complex network,and the global economy is closely connected,which is an important reason for the rapid spread of the crisis.Therefore,studying the structural characteristics of the global stock market network and drawing on the research methodology of contagion dynamics to explore the contagion path in depth is crucial for timely risk detection and prevention.In this paper,47 global stock indices are used as research objects to explore the risk transmission mechanism of global stock market in depth.First,a complex network model of the global stock market is constructed by the threshold method and its topological characteristics,including the mean path and clustering coefficients,degree,intermediary centrality and agglomeration coefficients of nodes,are analyzed in depth,leading to the discovery of the network’s obvious small-world nature.Based on this,an in-depth investigation of how the network topology affects the risk propagation in the global stock market is conducted.Second,based on undertaking the complex network construction of the global stock market and the statistical characteristics analysis,we further construct a SEIRS(Susce-ptible-exposed-infected-recovered-susceptible)contagion model of risk transmission in the stock market based on the small-world network characteristics.Since the risk control ability of each country plays an important role in influencing the infection rate in the contagion model,the credit rating of each country is included as an indicator of the risk control ability of each country.Through simulation experiments,the impact of different factors on the risk contagion in the global stock market is investigated,including the transmission path,single-factor changes,and the transmission process under the combined effect of two factors.Finally,the propagation is compared with the inclusion of risk control capacity indicators in each country and without the inclusion of indicators.It is found that the level of national risk control has a significant impact on the probability of risk transmission,thus determining the proportion of infected countries/regions in the overall network structure.Finally,countermeasure suggestions for the prevention and control of risk transmission in China are proposed in terms of controlling the source of infection and cutting off the transmission route.