# Hierarchical financial structures with money cascade

## TL;DR

This paper draws parallels between turbulence and financial systems, proposing a multiscale model that demonstrates wealth cascades and specific distribution patterns across different financial entity scales.

## Contribution

It introduces a novel hierarchical financial model inspired by turbulence, revealing wealth cascade dynamics and distribution patterns at multiple scales.

## Key findings

- Large and intermediate financial institutions follow a power law distribution.
- Wealth distribution at individual scales is Maxwellian.
- The model demonstrates a constant wealth cascade across scales.

## Abstract

In this paper we show similarities between turbulence and financial systems. Motivated by similarities between the two systems, we construct a multiscale model for hierarchical financial structures that exhibits a constant cascade of wealth from large financial entities to small financial entities. According to our model, large and intermediate scale financial institutions have a power law distribution. However, the wealth distribution is Maxwellian at individual scales.