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COVID-19 spreading in financial networks: A semiparametric matrix regression model

Billio Monica, Casarin Roberto, Costola Michele, Iacopini Matteo

arXiv 2 Jan 2021 · Econometrics · publishedEconometrics and Statistics (2021) · 11 citations (OpenAlex)

arXiv:2101.00422 · PDF · DOI · OpenAlex · Extracted main text

Abstract

Network models represent a useful tool to describe the complex set of financial relationships among heterogeneous firms in the system. In this paper, we propose a new semiparametric model for temporal multilayer causal networks with both intra- and inter-layer connectivity. A Bayesian model with a hierarchical mixture prior distribution is assumed to capture heterogeneity in the response of the network edges to a set of risk factors including the European COVID-19 cases. We measure the financial connectedness arising from the interactions between two layers defined by stock returns and volatilities. In the empirical analysis, we study the topology of the network before and after the spreading of the COVID-19 disease.

Citation extraction

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Most heavily cited references

The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.

ReferenceIntensityMentionsSectionsMain text
1Bekaert, G. and Wu, G (2000) Asymmetric volatility and risk in equity markets0.64422100%
2Billio, M., Getmansky, M., Lo, A. W., and Pelizzon, L (2012) Econometric measures of connectedness and systemic risk in the finance and insurance sectors0.64422100%
3Diebold, F. X. and Ylmaz, K (2014) On the network topology of variance decompositions: Measuring the connectedness of financial firms0.51121100%
4Carvalho, C. M. and West, M (2007) Dynamic matrix-variate graphical models0.40511100%
5Carvalho, C. M., Massam, H., and West, M (2007) Simulation of hyper-inverse Wishart distributions in graphical models0.40511100%
6Chen, E. Y., Tsay, R. S., and Chen, R (2019) Constrained factor models for high-dimensional matrix-variate time series0.40511100%
7Ahelegbey, D. F., Billio, M., and Casarin, R (2016) Sparse graphical vector autoregression: A Bayesian approach0.40511100%
8Golosnoy, V., Gribisch, B., and Liesenfeld, R (2012) The conditional autoregressive Wishart model for multivariate stock market volatility0.40511100%
9Gouriéroux, C., Jasiak, J., and Sufana, R (2009) The Wishart autoregressive process of multivariate stochastic volatility0.40511100%
10Harrison, J. and West, M (1999) Bayesian forecasting & dynamic models0.40511100%

Showing the top 10 of 33 scored citations.