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Quantifying firm-level economic systemic risk from nation-wide supply networks
Title / Series / Name
Scientific Reports
Publication Volume
12
Publication Issue
1
Pages
Editors
Keywords
Multidisciplinary
Files
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Kertesz-Janos2_2022.pdf
Adobe PDF, 2.42 MB
URI
https://hdl.handle.net/20.500.14018/26996
Abstract
Crises like COVID-19 exposed the fragility of highly interdependent corporate supply networks and the complex production processes depending on them. However, a quantitative assessment of individual companies’ impact on the networks’ overall production is hitherto non-existent. Based on a unique value added tax dataset, we construct the firm-level production network of an entire country at an unprecedented granularity and present a novel approach for computing the economic systemic risk (ESR) of all firms within the network. We demonstrate that 0.035% of companies have extraordinarily high ESR, impacting about 23% of the national economic production should any of them default. Firm size cannot explain the ESR of individual companies; their position in the production networks matters substantially. A reliable assessment of ESR seems impossible with aggregated data traditionally used in Input-Output Economics. Our findings indicate that ESR of some extremely risky companies can be reduced by introducing supply chain redundancies and changes in the network topology.
Topic
Publisher
Place of Publication
Type
Journal article
Date
2022-12
Language
ISBN
Identifiers
10.1038/s41598-022-11522-z