The structure and resilience of financial market networks

Financial markets can be viewed as a highly complex evolving system that is very sensitive to economic instabilities. The complex organization of the market can be represented in a suitable fashion in terms of complex networks, which can be constructed from stock prices such that each pair of stocks is connected by a weighted edge that encodes the distance between them. In this work, we propose an approach to analyze the topological and dynamic evolution of financial networks based on the stock correlation matrices. An entropy-related measurement is adopted to quantify the robustness of the evolving financial market organization. It is verified that the network topological organization suffers strong variation during financial instabilities and the networks in such periods become less robust. A statistical robust regression model is proposed to quantity the relationship between the network structure and resilience. The obtained coefficients of such model indicate that the average shortest path length is the measurement most related to network resilience coefficient. This result indicates that a collective behavior is observed between stocks during financial crisis. More specifically, stocks tend to synchronize their price evolution, leading to a high correlation between pair of stock prices, which contributes to the increase in distance between them and, consequently, decrease the network resilience. (C) 2012 American Institute of Physics. [doi:10.1063/1.3683467]

Social Networks, Segregation and Poverty in Sao Paulo

The associations between segregation and urban poverty have been intensely scrutinized by the sociology and urban studies literatures. More recently, several studies have emphasized the importance of social networks for living conditions. Yet relatively few studies have tested the precise effects of social networks, and fewer still have focused on the joint effects of residential segregation and social networks on living conditions. This article explores the associations between networks, segregation and some of the most important dimensions of access to goods and services obtained in markets: escaping from social precariousness and obtaining monetary income. It is based on a study of the personal networks of 209 individuals living in situations of poverty in seven locales in the metropolitan area of Sao Paulo. Using network analysis and multivariate techniques, I show that relational settings strongly influence the access individuals have to markets, leading some individuals into worse living conditions and poverty. At the same time, although segregation plays an important role in poverty, its effects tend to be mediated by the networks in which individuals are embedded. Networks in this sense may enhance or mitigate the effects of isolation produced by space.