Hierarchical financial structures with money cascade

Mahendra K. Verma

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arXiv · 1903.00313

Hierarchical financial structures with money cascade

Mahendra K. Verma

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Abstract

In this paper we show similarities between turbulence and financial systems. Motivated by similarities between the two systems, we construct a multiscale model for hierarchical financial structures that exhibits a constant cascade of wealth from large financial entities to small financial entities. According to our model, large and intermediate scale financial institutions have a power law distribution. However, the wealth distribution is Maxwellian at individual scales.

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q-fin.GN cond-mat.stat-mech physics.flu-dyn physics.hist-ph

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Mahendra K. Verma. 2019-02-23. Hierarchical financial structures with money cascade. https://arxiv.org/abs/1903.00313

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