DebtStreamness: An Ecological Approach to Credit Flows in Inter-Firm Networks
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arXiv
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| Main Authors: | , , , , , |
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| Format: | Preprint |
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2025
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| _version_ | 1866915270539345920 |
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| author | Rodríguez-Martínez, Anahí Bartolucci, Silvia Caravelli, Francesco Landaberry, Victoria Vivo, Pierpaolo Caccioli, Fabio |
| author_facet | Rodríguez-Martínez, Anahí Bartolucci, Silvia Caravelli, Francesco Landaberry, Victoria Vivo, Pierpaolo Caccioli, Fabio |
| contents | Understanding how credit flows through inter-firm networks is critical for assessing financial stability and systemic risk. In this study, we introduce DebtStreamness, a novel metric inspired by trophic levels in ecological food webs, to quantify the position of firms within credit chains. By viewing credit as the ``primary energy source'' of the economy, we measure how far credit travels through inter-firm relationships before reaching its final borrowers. Applying this framework to Uruguay's inter-firm credit network, using survey data from the Central Bank, we find that credit chains are generally short, with a tiered structure in which some firms act as intermediaries, lending to others further along the chain. We also find that local network motifs such as loops can substantially increase a firm's DebtStreamness, even when its direct borrowing from banks remains the same. Comparing our results with standard economic classifications based on input-output linkages, we find that DebtStreamness captures distinct financial structures not visible through production data. We further validate our approach using two maximum-entropy network reconstruction methods, demonstrating the robustness of DebtStreamness in capturing systemic credit structures. These results suggest that DebtStreamness offers a complementary ecological perspective on systemic credit risk and highlights the role of hidden financial intermediation in firm networks. |
| format | Preprint |
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arxiv_https___arxiv_org_abs_2505_01326 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | DebtStreamness: An Ecological Approach to Credit Flows in Inter-Firm Networks Rodríguez-Martínez, Anahí Bartolucci, Silvia Caravelli, Francesco Landaberry, Victoria Vivo, Pierpaolo Caccioli, Fabio General Economics Economics Physics and Society Understanding how credit flows through inter-firm networks is critical for assessing financial stability and systemic risk. In this study, we introduce DebtStreamness, a novel metric inspired by trophic levels in ecological food webs, to quantify the position of firms within credit chains. By viewing credit as the ``primary energy source'' of the economy, we measure how far credit travels through inter-firm relationships before reaching its final borrowers. Applying this framework to Uruguay's inter-firm credit network, using survey data from the Central Bank, we find that credit chains are generally short, with a tiered structure in which some firms act as intermediaries, lending to others further along the chain. We also find that local network motifs such as loops can substantially increase a firm's DebtStreamness, even when its direct borrowing from banks remains the same. Comparing our results with standard economic classifications based on input-output linkages, we find that DebtStreamness captures distinct financial structures not visible through production data. We further validate our approach using two maximum-entropy network reconstruction methods, demonstrating the robustness of DebtStreamness in capturing systemic credit structures. These results suggest that DebtStreamness offers a complementary ecological perspective on systemic credit risk and highlights the role of hidden financial intermediation in firm networks. |
| title | DebtStreamness: An Ecological Approach to Credit Flows in Inter-Firm Networks |
| topic | General Economics Economics Physics and Society |
| url | https://arxiv.org/abs/2505.01326 |