Chain of Firms Bankruptcy

DOI

10.2991/jcis.2006.330How to use a DOI?

Keywords

production network, bankruptcy chain, power-law, econophysics

Abstract

A link in production network is usually a creditor-debtor relationship. If a firm goes into financial insolvency state or bankruptcy, then firms on its upstream can have secondary effect from the bankruptcy. By using the recent 10 years data of bankruptcy in japan, we show that these causes of ``link effect'' are by no means negligible. Indeed, nearly 20\% of total debt (a few percent of GDP) is due to such effect. Moreover, the link effect dominates, in probability, other causes of bankruptcy, such as poor performance in business, in the power-law regime of the distribution of debt when bankrupted. Because the production network has a heavy tail in degree distribution, and the effect due to bankruptcy chain is considerable in its ripple effect.

Copyright

© 2006, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Yoshi Fujiwara
PY  - 2006/10
DA  - 2006/10
TI  - Chain of Firms Bankruptcy
BT  - Proceedings of the 9th Joint International Conference on Information Sciences (JCIS-06)
PB  - Atlantis Press
SN  - 1951-6851
UR  - https://doi.org/10.2991/jcis.2006.330
DO  - 10.2991/jcis.2006.330
ID  - Fujiwara2006/10
ER  -