Paper
Modeling structure and credit risk of the economy: a multilayer bank-firm network approach
Authors
Soumen Majhi, Anna Mancini, Giulio Cimini
Abstract
Assessing the resilience of the economy requires accounting for its intrinsic multi-layer nature, by assessing for instance how disruptions at the firm level spread through the production network and propagate to the banking sector. Methods exist to measure the reverberation of shocks over the multilayer network of supply-customer relations among firms, corporate loans of banks and their interbank market exposures. However, empirical network data are often privacy protected and thus inaccessible to researchers and regulators. In this work we develop an unified framework, combining state-of-the art techniques to reconstruct the whole multilayer structure of the economy from balance sheet information of banks and firms, as well as dynamics of shock propagation from the inter-firm to the interbank layers. We showcase application of our methodology using data of the Italian economy. We identify the most systemically important firms and industries, as well as the most vulnerable banks, further assessing the determinants of systemic risk -- obtaining results coherent with the empirical literature on network contagion. Overall, our framework allows performing detailed network-based stress tests on a digital twin of the economy, without requiring detailed network information that is difficult to acquire.
Metadata
Related papers
Cosmic Shear in Effective Field Theory at Two-Loop Order: Revisiting $S_8$ in Dark Energy Survey Data
Shi-Fan Chen, Joseph DeRose, Mikhail M. Ivanov, Oliver H. E. Philcox • 2026-03-30
Stop Probing, Start Coding: Why Linear Probes and Sparse Autoencoders Fail at Compositional Generalisation
Vitória Barin Pacela, Shruti Joshi, Isabela Camacho, Simon Lacoste-Julien, Da... • 2026-03-30
SNID-SAGE: A Modern Framework for Interactive Supernova Classification and Spectral Analysis
Fiorenzo Stoppa, Stephen J. Smartt • 2026-03-30
Acoustic-to-articulatory Inversion of the Complete Vocal Tract from RT-MRI with Various Audio Embeddings and Dataset Sizes
Sofiane Azzouz, Pierre-André Vuissoz, Yves Laprie • 2026-03-30
Rotating black hole shadows in metric-affine bumblebee gravity
Jose R. Nascimento, Ana R. M. Oliveira, Albert Yu. Petrov, Paulo J. Porfírio,... • 2026-03-30
Raw Data (Debug)
{
"raw_xml": "<entry>\n <id>http://arxiv.org/abs/2603.09854v1</id>\n <title>Modeling structure and credit risk of the economy: a multilayer bank-firm network approach</title>\n <updated>2026-03-10T16:15:17Z</updated>\n <link href='https://arxiv.org/abs/2603.09854v1' rel='alternate' type='text/html'/>\n <link href='https://arxiv.org/pdf/2603.09854v1' rel='related' title='pdf' type='application/pdf'/>\n <summary>Assessing the resilience of the economy requires accounting for its intrinsic multi-layer nature, by assessing for instance how disruptions at the firm level spread through the production network and propagate to the banking sector. Methods exist to measure the reverberation of shocks over the multilayer network of supply-customer relations among firms, corporate loans of banks and their interbank market exposures. However, empirical network data are often privacy protected and thus inaccessible to researchers and regulators. In this work we develop an unified framework, combining state-of-the art techniques to reconstruct the whole multilayer structure of the economy from balance sheet information of banks and firms, as well as dynamics of shock propagation from the inter-firm to the interbank layers. We showcase application of our methodology using data of the Italian economy. We identify the most systemically important firms and industries, as well as the most vulnerable banks, further assessing the determinants of systemic risk -- obtaining results coherent with the empirical literature on network contagion. Overall, our framework allows performing detailed network-based stress tests on a digital twin of the economy, without requiring detailed network information that is difficult to acquire.</summary>\n <category scheme='http://arxiv.org/schemas/atom' term='physics.soc-ph'/>\n <category scheme='http://arxiv.org/schemas/atom' term='q-fin.RM'/>\n <published>2026-03-10T16:15:17Z</published>\n <arxiv:primary_category term='physics.soc-ph'/>\n <author>\n <name>Soumen Majhi</name>\n </author>\n <author>\n <name>Anna Mancini</name>\n </author>\n <author>\n <name>Giulio Cimini</name>\n </author>\n </entry>"
}