Backbone of credit relationships in the Japanese credit market

TL;DR

This paper identifies the core structure of the Japanese credit market over three decades by extracting statistically validated backbones from the bipartite network of bank-firm relationships, revealing key changes over time.

Contribution

It introduces a method to detect the backbone of weighted bipartite networks and applies it to the Japanese credit market, uncovering its evolution from 1980 to 2011.

Findings

Backbone size changed over time.

Fraction of credit explained by the backbone varied.

Attributes of banks and firms in the backbone evolved.

Abstract

We detect the backbone of the weighted bipartite network of the Japanese credit market relationships. The backbone is detected by adapting a general method used in the investigation of weighted networks. With this approach we detect a backbone that is statistically validated against a null hypothesis of uniform diversification of loans for banks and firms. Our investigation is done year by year and it covers more than thirty years during the period from 1980 to 2011. We relate some of our findings with economic events that have characterized the Japanese credit market during the last years. The study of the time evolution of the backbone allows us to detect changes occurred in network size, fraction of credit explained, and attributes characterizing the banks and the firms present in the backbone.