A research on driver nodes identification in Chinese interbank networks: based on the controllability theory of complex network

ABSTRACT

We propose a  method of network controllability to identify the driver nodes in Chinese interbank lending networks from 2008 to 2014, and analyse the role and influence of the driver nodes in the banking system. The results show that it is enough to control only n_D (the fraction of minimum driver nodes) of the banks to steer the entire banking system. We find that the driver nodes are often not the most closely connected banks, nor the largest banks. We further introduce the concept of control centrality to quantify the ability of a single node to control a banking network, and we validate our results by showing that the driver nodes have larger control centrality. Our conclusions can help the regulatory authorities determine the institutions that should be supervised or controlled, and provide new ideas and theoretical basis for improving the macroprudential supervision policy.

KEYWORDS:

• Chinese interbank networks
• driver nodes
• network controllability
• control centrality

JEL CLASSIFICATION:

• C32
• G21
• G28

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This work was supported by Major Research Plan of National Natural Science Foundation of China [No.71991473] and Collaboration Innovation Center of Industrial Upgrading and Regional Finance (Hubei).