Visualizing Financial

Networksnew understanding of the financial system and implications for policy

makers

Inês SalpicoKimmo Soramäki

VISUALIZAR’1115th June 2011

Context: Aftermath of the financial crisis

Financial System

understood as a network

Systemic risk:“too connected to fail”

Stress and increase of regulation

Extended mandate(s) to collect data

Need to process and analyze this

data

New paradigm of

data collection and analysis

Questions:

• How to make sense of data?

Questions:

• How to make data analysis actually operative in supervision and regulation?

• How to make sense of data?

SUPERVISIONREGULATION

Data

THEORYRESEARCH

Methods

New analytical paradigms

namely: network

Questions:

• How to make data analysis actually operative in policy and supervision?

• How to make sense of data?

• How to use analysis to actually see what’s happening in the system?

x(You wish!)

Intelligence?

• Financial crisis are different and rare

Intelligence?

• Financial crisis are different and rare

• The patterns to be recognized would have to be frequent enough for computers to learn

The wire – video excerpt

Intelligence?

AI - Artificial Intelligence

Intelligence?

AI - Artificial Intelligence

IA - Intelligence Amplification

Tools that make data and analysis actionable for humans

ref: William Ross Ashby (1956) in ‘Introduction to Cybernetics’

Visualization

Tools vs. Customised Visualizations

> Fusion Charts http://www.fusioncharts.com/

> Gephi http://gephi.org/

> Google Chart Tools http://code.google.com/intl/pt-PT/apis/charttools/

> HighCharts http://www.highcharts.com/

> Many Eyes (IBM)

http://www-958.ibm.com/software/data/cognos/manyeyes/

> Protovis http://vis.stanford.edu/protovis/

> Tableau http://www.tableausoftware.com/

Tools vs. Customised Visualizations

Visualization

> Information is Beautiful

http://www.informationisbeautiful.net/

> Infosthetics http://infosthetics.com/

> Flowing Data http://flowingdata.com/

> Marumushi

http://marumushi.com/tags/information+visualization

> Visual Complexity http://www.visualcomplexity.com/vc/

Tools vs. Customised Visualizations

Visualization

Infographics vs. Analytical Visualizations

> Representation: Qualitative vs. Quantitative

Infographics vs. Analytical Visualizations

> Representation: Qualitative vs. Quantitative

> Focus: Message vs. Data

> Representation: Qualitative vs. Quantitative

> Focus: Message vs. Data

> Exploration: Limited vs. Unlimited

Europe's Web of DebtBill Marsh/The New York Times Visual Science Series , May 1, 2010

Analysis + Visualization

Infographical and Analytical

> Qualitative and Quantitative

> Exploration and analysis of the raw data

Paradigm

Data validation

Analysis and modeling Visualization

understanding

Objectives

• Provide a tool for time series analysis of network data in finance

• Provide a platform for building agent based and simulation models

• Make advances in research available to policy

• Based on 7 years of research with Central Banks

• Focus on ease of use, performance and flexibility

FNA demo – video excerpts

FNA

Platform for

– Exploring – Analyzing– Visualizing

financial networks

Versions

– Web – Cloud service– REST API (for accessing FNA engine from web applications)

– Intranet– Operative use– Integration to databases and user management– Browser based GUI

– Desktop – By demand, academic use– Command line version available– Integration with external programs like Matlab, Stata, Excel, etc.

Thank you

More informationwww.financialnetworkanalysis.com

Contact uskimmo@soramaki.net

ines@soramaki.net