Financial Complexity: A Comparison Study of Türkiye, Iran, Saudi Arabia and the UAE

Over the last few decades, the global financial network has become increasingly complex due to the rapid growth in science and technology, as well as the expanding number of financial instruments worldwide. In this setting, several issues and problems arose, including the rising systemic risk in the financial sector, which in turn increased the sector's vulnerability. In emerging markets, such as Türkiye, Iran, Saudi Arabia, and the UAE, the potential risk may arise due to the financial complexity of these markets. Therefore, the probability of crises will increase. This study investigated the complexity of financial systems in these countries using McCabe’s network approach from 2005 to 2020. Measuring complexity indicates that Türkiye, with a score of 95, Iran (77), Saudi Arabia (49), and the UAE (36) have been graded in terms of financial complexity. As a result, Türkiye has the highest, and the UAE has the lowest systemic risk among these countries. Additionally, the results suggest that capital markets do not play a significant role in these economies.