Abstract
In this study, we investigate the flow of money among bank accounts possessed by firms in a region by employing an exhaustive list of all the bank transfers in a regional bank in Japan, to clarify how the network of money flow is related to the economic activities of the firms. The network statistics and structures are examined and shown to be similar to those of a nationwide production network. Specifically, the bowtie analysis indicates what we refer to as a “walnut” structure with core and upstream/downstream components. To quantify the location of an individual account in the network, we used the Hodge decomposition method and found that the Hodge potential of the account has a significant correlation to its position in the bowtie structure as well as to its net flow of incoming and outgoing money and links, namely the net demand/supply of individual accounts. In addition, we used non-negative matrix factorization to identify important factors underlying the entire flow of money; it can be interpreted that these factors are associated with regional economic activities. One factor has a feature whereby the remittance source is localized to the largest city in the region, while the destination is scattered. The other factors correspond to the economic activities specific to different local places. This study serves as a basis for further investigation on the relationship between money flow and economic activities of firms.
Highlights
Determining how money flows among economic entities is an important aspect of understanding the underlying economic activities
4 Conclusion We studied an exhaustive list of bank accounts of firms and remittances from source to destination within a regional bank with a high market share of loans and deposits in a prefecture of Japan
We found that the statistical features of the network are similar to those of a production network on a nationwide scale in Japan [3], but with greater emphasis on the regional aspects
Summary
Determining how money flows among economic entities is an important aspect of understanding the underlying economic activities. The so-called flow of funds accounts record the financial transactions and the resulting credits and liabilities among households, firms, banks, and the government (see, e.g., [1]) Another example is the input-output table, which describes the purchase and sale relationships among producers and consumers within an economy and clarifies the flows of final and intermediate goods and services with respect to industrial sectors and product outputs (e.g., [2]). These data are used in macroscopic studies, such as those of industrial sectors and aggregated economic entities. Microscopic and macroscopic data are compiled and updated annually or quarterly at most (see [3, 6] and the references therein)
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