Financial crises result from a catastrophic combination of actions. Vast stock market datasets offer us a window into some of the actions that have led to these crises. Here, we investigate whether data generated through Internet usage contain traces of attempts to gather information before trading decisions were taken. We present evidence in line with the intriguing suggestion that data on changes in how often financially related Wikipedia pages were viewed may have contained early signs of stock market moves. Our results suggest that online data may allow us to gain new insight into early information gathering stages of decision making.

Significance Internet search data may offer new possibilities to improve forecasts of collective behavior, if we can identify which parts of these gigantic search datasets are relevant. We introduce an automated method that uses data from Google and Wikipedia to identify relevant topics in search data before large events. Using stock market moves as a case study, our method successfully identifies historical links between searches related to business and politics and subsequent stock market moves. We find that the predictive value of these search terms has recently diminished, potentially reflecting increasing incorporation of Internet data into automated trading strategies. We suggest that extensions of these analyses could help draw links between search data and a range of other collective actions.

According to the leading models in modern finance, the presence of intraday lead-lag relationships between financial assets is negligible in efficient markets. With the advance of technology, however, markets have become more sophisticated. To determine whether this has resulted in an improved market efficiency, we investigate whether statistically significant lagged correlation relationships exist in financial markets. We introduce a numerical method to statistically validate links in correlationbased networks, and employ our method to study lagged correlation networks of equity returns in financial markets. Crucially, our statistical validation of lead-lag relationships accounts for multiple hypothesis testing over all stock pairs. In an analysis of intraday transaction data from the periods 2002-2003 and 2011-2012, we find a striking growth in the networks as we increase the frequency with which we sample returns. We compute how the number of validated links and the magnitude of correlations change with increasing sampling frequency, and compare the results between the two data sets. Finally, we compare topological properties of the directed correlation-based networks from the two periods using the in-degree and out-degree distributions and an analysis of three-node motifs. Our analysis suggests a growth in both the efficiency and instability of financial markets over the past decade.

Systems composed of many interacting dynamical networks—such as the human body with its biological networks or the global economic network consisting of regional clusters—often exhibit complicated collective dynamics. Three fundamental processes that are typically present are failure, damage spread and recovery. Here we develop a model for such systems and find a very rich phase diagram that becomes increasingly more complex as the number of interacting networks increases. In the simplest example of two interacting networks we find two critical points, four triple points, ten allowed transitions and two ‘forbidden' transitions, as well as complex hysteresis loops. Remarkably, we find that triple points play the dominant role in constructing the optimal repairing strategy in damaged interacting systems. To test our model, we analyse an example of real interacting financial networks and find evidence of rapid dynamical transitions between well-defined states, in agreement with the predictions of our model.