Elsevier Journal pre-print

Keywords

financial networks, counterparty risk,  systemic risk, , banking, payments, cryptocurrency, fintech.

Introduction

The study of trust asymmetries \cite{Venegas_2018} in the financial sector requires an extensive mapping of the institutions that are part of the system; both regulated and unregulated players introduce different fragility vectors \cite{Taleb_2010} that central bankers should understand and that potential business partners, acquirers, and, banking providers should investigate for the purpose of counterparty risk assessment. The question that we seek to answer is: how to assess the likelihood of compliance for unregulated and loosely regulated financial providers?
The paper summarizes research conducted using commercial financial databases, the details on the algorithm and sources are available upon request. 

Method

Coverage

The number and types of players in the non-banking segment, and particularly in the Fintech branch, is undergoing rapid growth due to the accelerating pace of innovation in the financial sector. We learn the categorical segments (e.g. non-bank lenders, digital assets exchanges) from data, although on occasion there are overlaps related to competitive dynamism i.e companies diversify into different delivery platforms/devices, M&A activity, and so on. The figure shows the non-banks taxonomy used as a departing point, but this one calibrates at regular intervals to provide a more accurate depiction of the environment as it changes--the evolving risk space.