Event Driven Motif Exploration of Dynamic Banking Transaction Network

Banking transactions are the fundamental indicator of an economy. The complex, large-scale, and interconnected transactions between banks are considered as a financial architecture backbone. Interbank transactions are modelled into a banking network. The network strong interconnectedness escalates contagion default spreading over the network and trigger the entire system to collapse. This far, financial crisis is detected through the macro approach. This study seek for another point of view. We predict the financial crisis through the micro view, where focuses on detailed network components called motif. Network motifs are used as a tool to predict financial crisis by focusing on the microscopic structure change within a network. The network structure changes due to a disruption. We explore the network motifs change under pre-crisis, crisis, and post-crisis periods (October 2007 to March 2009). We use the network structural change response to determine predictor(s). The motif types that having major changes along the crisis period then determined as crisis predictor. Through the scenario, we discover one motif as the underlying predictor of financial crisis. This study is able to support the financial system stability supervision.