Construction Of A Double-layer Financial Network And Identification Of Systematically Important Financial Institutions

The complex trading relationships among financial institutions can efficiently allocate financial market resources.However,this also poses the risk of a single institution’s risk becoming a systemic risk for the entire industry.Therefore,research on systemic risks of financial institutions from a network perspective has attracted the attention of many scholars.Based on the complexity and diversity of business relationships among financial institutions,this article uses complex network theory to construct a double-layer network model to identify systemically important financial institutions in the Chinese financial system.Firstly,this study analyzes banks,insurance companies,securities,and other non-banking financial institutions listed from 2012 to 2021.Single-layer financial networks are constructed based on their interbank lending relationships and cross-shareholding relationships.The study focuses on analyzing the basic characteristics of these networks.The results indicate that both types of networks demonstrate sparsity and low clustering,which are real network characteristics.Furthermore,networks constructed from distinct transaction relationships exhibit unique network structures,and the roles and functions of each financial institution vary across different transaction markets.Secondly,a double-layer financial network model is created by merging the interbank lending transactions and cross-shareholding relationships of financial institutions.Based on this model,the risk management Debt Rank(RM-Debt Rank)model is proposed to identify systemically important financial institutions,taking into account the risk management ability of the institutions.Our research findings indicate that state-owned commercial banks,joint-stock commercial banks,urban commercial banks,and insurance institutions are the key systemically important financial institutions in China.Only a few financial institutions exhibit systemic importance in the entire financial system,and the Chinese financial system has the phenomenon of being " too big to fail" and "too interconnected to fail".Overall,by studying the multi-layer network structure and evolutionary characteristics of financial institutions,the complexity of business relationships between financial institutions is revealed.The research results of this paper have certain theoretical reference value and practical guidance significance for regulatory authorities to extract internal characteristics of systemically important financial institutions,prevent and resolve systemic risks,and maintain stable operation of the financial market among financial institutions.