Hierarchical and Circular Flow Structure of Interfirm Transaction Networks in Japan

Kichikawa, Yuichi; Iyetomi, Hiroshi; Iino, Takashi; Inoue, Hiroyasu

doi:10.2139/ssrn.3173955

Cited by 8 publications

(8 citation statements)

References 7 publications

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“…The Hodge decomposition of the flow in a network is a mathematical method of ranking nodes according to their locations upstream or downstream of the flow [15]. This method, also known as the Helmholtz-Hodge-Kodaira decomposition, has been used to find such a structure in complex networks (see, e.g., neural networks [16] and economic networks [17][18][19]).…”

Section: Hodge Decomposition: Upstream/downstream Flowmentioning

confidence: 99%

Money flow network among firms’ accounts in a regional bank of Japan

et al. 2021

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In this study, we investigate the flow of money among bank accounts possessed by firms in a region by employing an exhaustive list of all the bank transfers in a regional bank in Japan, to clarify how the network of money flow is related to the economic activities of the firms. The network statistics and structures are examined and shown to be similar to those of a nationwide production network. Specifically, the bowtie analysis indicates what we refer to as a “walnut” structure with core and upstream/downstream components. To quantify the location of an individual account in the network, we used the Hodge decomposition method and found that the Hodge potential of the account has a significant correlation to its position in the bowtie structure as well as to its net flow of incoming and outgoing money and links, namely the net demand/supply of individual accounts. In addition, we used non-negative matrix factorization to identify important factors underlying the entire flow of money; it can be interpreted that these factors are associated with regional economic activities. One factor has a feature whereby the remittance source is localized to the largest city in the region, while the destination is scattered. The other factors correspond to the economic activities specific to different local places. This study serves as a basis for further investigation on the relationship between money flow and economic activities of firms.

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Section: Hodge Decomposition: Upstream/downstream Flowmentioning

confidence: 99%

Money flow network among firms’ accounts in a regional bank of Japan

et al. 2021

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“…The Helmholtz-Hodge potential of a node reflects its hierarchical position in its flow structure, which neglects the effect from the feedback mechanism. The potential φ i for every node can be easily determined by minimizing the overall squared difference between the actual flow and the gradient flow (see [8,9] for more details).…”

Section: Helmholtz-hodge Decompositionmentioning

confidence: 99%

Identifying the Hierarchical Influence Structure Behind Smart Sanctions Using Network Analysis

Hisano

Iyetomi

Mizuno

2020

Lecture Notes in Computer Science

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Smart sanctions are an increasingly popular tool in foreign policy. Countries and international institutions worldwide issue such lists to sanction targeted entities through financial asset freezing, embargoes, and travel restrictions. The relationships between the issuer and the targeted entities in such lists reflect what kind of entities the issuer intends to be against. Thus, analyzing the similarities of sets of targeted entities created by several issuers might pave the way toward understanding the foreign political power structure that influences institutions to take similar actions. In the current paper, by analyzing the smart sanctions lists issued by major countries and international institutions worldwide (a total of 73 countries, 12 international organizations, and 1,700 lists), we identify the hierarchical structure of influence among these institutions that encourages them to take such actions. The Helmholtz–Hodge decomposition is a method that decomposes network flow into a hierarchical gradient component and a loop component and is especially suited for this task. Hence, by performing a Helmholtz–Hodge decomposition of the influence network of these institutions, as constructed from the smart sanctions lists they have issued, we show that meaningful insights about the hierarchical influence structure behind smart sanctions can be obtained.

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“…The so-called Hodge decomposition of flow on a network is a mathematical method of ranking nodes according to its location in terms of upstream and downstream of the flow (Jiang et al, 2011). The method, also known as Helmholtz-Hodge-Kodaira decomposition, has been used to find such a structure in complex networks (see the applications to economic networks in Iyetomi et al, 2020;Kichikawa et al, 2018).…”

Section: Hodge Decompositionmentioning

confidence: 99%

“…See the detailed study on the same Japanese production network's walnut structure inChakraborty et al (2018).3 See the citedKichikawa et al (2018);Iyetomi et al (2020) for more general cases.…”

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confidence: 99%

Does the Supply Network Shape the Firm Size Distribution? The Japanese Case

Guilmi

Fujiwara

2020

SSRN Journal

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The relationship between firms' growth rates and firm size distribution has been extensively analyzed in the literature. In particular, the breakdown of Gibrat law for medium and small firms has been identified as the reason for the emergence of a power law only in right tail of the size distribution. However, the growth rates of firms are not mutually independent, since firms are connected in the supply network and idiosyncratic shocks are transmitted through the networks links. This paper presents a stylized empirical and theoretical investigation on the Japanese supply network to shed light on the effects of demand shock on the growth of firms in the different layers of the network. We find that the growth rates are more volatile for small firms, which tend to be located upstream in the supply network, leading to the breakdown of the Gibrat law. The difference in growth volatility depends on the fact that downstream shocks are amplified as they are transmitted upward in the supply chain. The extent of the amplification depends on the level of connectivity of the network and, more precisely, it is larger in more dense networks. Further, the level to which a firm is affected depends on its relative position within the network.

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Hierarchical and Circular Flow Structure of Interfirm Transaction Networks in Japan

Cited by 8 publications

References 7 publications

Money flow network among firms’ accounts in a regional bank of Japan

Money flow network among firms’ accounts in a regional bank of Japan

Identifying the Hierarchical Influence Structure Behind Smart Sanctions Using Network Analysis

Does the Supply Network Shape the Firm Size Distribution? The Japanese Case

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