Network Topology and Stability in Chinese Credit System

Abstract

In this study, we explore the relationship between structural topologies and network stability within the Chinese guarantee system. First, we introduce a contagion model to simulate the stability of Chinese credit system for 63 months, and find that the network structure is influenced by the financial crisis and Chinese 4 trillion stimulus program. Then, we connect the network stability with network topologies, and discover that during the financial crisis, the decrease of local connection (reciprocity, degree and clustering,) boost network stability. Conversely, the implementation of the stimulus program increases network interconnection (reciprocity, degree and clustering), which enhance the network fragility. Our findings could shed light on how to increase network stability from the perspective of network structure.