Production and financial linkages in inter-firm networks: structural variety, risk-sharing and resilience
The paper analyzes how (production and financial) inter-firm networks can affect firms’ default probabilities and observed default rates. A
simple theoretical model of shock transfer is built to investigate some stylized facts on how firm-idiosyncratic shocks are allocated in the network, and how this allocation changes firm default probabilities. The model shows that the network works as a perfect “risk-pooling” mechanism, when it is both strongly connected and symmetric. But the “risk-sharing” does not necessarily reduce default rates, unless the shock firms face is lower on average than their financial capacity. Conceived as cases of symmetric inter-firm networks, industrial districts might have a comparative disadvantage in front of heavy crises.
CAINELLI Giulio;
MONTRESOR Sandro;
VITTUCCI MARZETTI Giuseppe;
2013-01-17
SPRINGER
JRC76484
0936-9937,
https://publications.jrc.ec.europa.eu/repository/handle/JRC76484,
10.1007/s00191-012-0280-6,
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