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Mastering R for Quantitative Finance by Edina Berlinger, Ferenc Illés, Milán Badics, Ádám Banai, Gergely Daróczi, Barbara Dömötör, Gergely Gabler, Dániel Havran, Péter Juhász, István Margitai, Balázs Márkus, Péter Medvegyev, Julia Molnár, Balázs Árpád Szűcs, Ágnes Tuza, Tamás Vadász, Kata Váradi, Ágnes Vidovics-Dancs

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Core-periphery decomposition

Interbank markets are tiered and operate in a hierarchical fashion. It is a well-known characteristic of these markets that many banks are dealing with only a small number of big institutions, while these big institutions are acting like intermediaries or money-center banks. These big institutions are considered to be the core of the network, and the others are the periphery.

Many papers focused on this characteristic of real-world networks. For example, Borgatti and Everett (1999) examined this phenomenon on a network made of citation data, and found three journals to be the members of the core. Craig and von Peter (2010) used this core/periphery structure for the German interbank market. Their findings suggest that ...

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