Quantifying firm-level economic systemic risk from nation-wide supply networks.
Sci Rep
; 12(1): 7719, 2022 05 11.
Article
in English
| MEDLINE | ID: covidwho-1947421
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.
Full text:
Available
Collection:
International databases
Database:
MEDLINE
Main subject:
COVID-19
Type of study:
Observational study
/
Prognostic study
Limits:
Humans
Language:
English
Journal:
Sci Rep
Year:
2022
Document Type:
Article
Affiliation country:
S41598-022-11522-z
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