Network Characteristics, Efficiency of Financial Institutions, and Risk-taking

This paper research on 45 listed financial institutions in the banking, securities, trust, and insurance industries. We analyze the impact mechanism of the position and influence of financial institutions in their connected network on their operational efficiency, including cost efficiency and profit efficiency, and systemic risk. The research indicates that the financial network in China presents the “core-edge” distribution characteristics. There are significant differences in the distribution of cost, profit and risk between the core financial institutions and the marginal institutions. With the aggravation of the differentiation of financial institutions in the network, this distribution difference will also increase. The more popular financial institutions in the core position of the financial network have lower cost efficiency, higher profit efficiency and lower systemic risk. The intermediary effect shows that there are significantrisk channels, and the network characteristics affect the cost efficiency and profit efficiency of financial institutions through their systematic risks.