Systemically important company identification based on topological characteristics of the common share pledge network

Introduction With the continuous development of the global securities market, share pledges as a business form are gradually emerging. However, there are also certain risks associated with share pledges. There are many common pledges between different share pledgers, which may result in financial contagion. Methods This paper constructs a common share pledge network and proposes an identification method of systemically important listed companies by analyzing the characteristics of its network structure, to improve the stability of the financial market. Results The results show that the share pledges are concentrated in a certain number of large companies, exhibiting scale-free characteristics and multiple local community features. The supervision of share pledges will promote the formation of such characteristics. Although financial supervision reduces the probability of share pledge risks, it also improves the importance of companies with high centrality in the share pledge market. Discussion Compared with the traditional network characteristics the centrality of the common share pledge network will provide more information about the share pledge risk. Different characteristics of network centrality can effectively identify systemically important companies, which has important regulatory value for financial risk prevention.

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Publication Details

Journal
Frontiers in Physics
Published
2025-03-19
DOI
https://doi.org/10.3389/fphy.2025.1562015
Primary Topic
Corporate Finance and Governance
Type
article
Field-Weighted Citation Impact
0.00
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article

Systemically important company identification based on topological characteristics of the common share pledge network

Yinfa Ma, Chao Wang, Qiong Sun
Frontiers in Physics
Corporate Finance and Governance
article

Systemically important company identification based on topological characteristics of the common share pledge network

Yinfa Ma, Chao Wang, Qiong Sun
article en

Abstract

Introduction With the continuous development of the global securities market, share pledges as a business form are gradually emerging. However, there are also certain risks associated with share pledges. There are many common pledges between different share pledgers, which may result in financial contagion. Methods This paper constructs a common share pledge network and proposes an identification method of systemically important listed companies by analyzing the characteristics of its network structure, to improve the stability of the financial market. Results The results show that the share pledges are concentrated in a certain number of large companies, exhibiting scale-free characteristics and multiple local community features. The supervision of share pledges will promote the formation of such characteristics. Although financial supervision reduces the probability of share pledge risks, it also improves the importance of companies with high centrality in the share pledge market. Discussion Compared with the traditional network characteristics the centrality of the common share pledge network will provide more information about the share pledge risk. Different characteristics of network centrality can effectively identify systemically important companies, which has important regulatory value for financial risk prevention.

Frontiers in PhysicsVol. 13
Nanjing Agricultural University (CN), Southeast University (CN)
Openalex Percentile: Top 93%
Corporate Finance and Governance
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