Bank-firm credit network in Japan. An analysis of a bipartite network

TL;DR

This paper analyzes Japan's credit market as a bipartite network of banks and firms over 32 years, revealing persistent community structures and attribute over-expressions that shape credit relationships.

Contribution

It introduces a community detection method for bipartite networks and tracks the evolution of bank-firm communities over time in Japan.

Findings

Communities show persistent attribute over-expression over 32 years.

Credit market structure is influenced by bank type, firm location, and economic sector.

Community attributes evolve slowly, indicating stable underlying factors.

Abstract

We present an analysis of the credit market of Japan. The analysis is performed by investigating the bipartite network of banks and firms which is obtained by setting a link between a bank and a firm when a credit relationship is present in a given time window. In our investigation we focus on a community detection algorithm which is identifying communities composed by both banks and firms. We show that the clusters obtained by directly working on the bipartite network carry information about the networked nature of the Japanese credit market. Our analysis is performed for each calendar year during the time period from 1980 to 2011. Specifically, we obtain communities of banks and networks for each of the 32 investigated years, and we introduce a method to track the time evolution of these communities on a statistical basis. We then characterize communities by detecting the simultaneous over-expression of attributes of firms and banks. Specifically, we consider as attributes the economic sector and the geographical location of firms and the type of banks. In our 32 year long analysis we detect a persistence of the over-expression of attributes of clusters of banks and firms together with a slow dynamics of changes from some specific attributes to new ones. Our empirical observations show that the credit market in Japan is a networked market where the type of banks, geographical location of firms and banks and economic sector of the firm play a role in shaping the credit relationships between banks and firms.