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Analysis of financial events under an assumption of complexity

Published online by Cambridge University Press:  04 December 2018

Yifei Li  and
John Evans
Yifei Li
Affiliation:
Sydney Business School, University of Wollongong, Wollongong, New South Wales, Australia
John Evans*
Affiliation:
Centre for Analysis of Complex Financial System, Sydney, New South Wales, Australia
*
*Correspondence to: John Evans, Centre for Analysis of Complex Financial System, PO Box 363 Summer Hill, Sydney, New South Wales, Australia. E-mail: jevans@pgeaus.onmicrosoft.com
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Abstract

The financial system can be shown to be a complex adaptive system consisting primarily of a federation of systems and systems of systems. There are significant similarities between the characteristics of natural systems and financial systems suggesting that the type of analysis employed in understanding natural systems could have application in financial system analysis. Cladistics analysis has been used extensively for analysis of biological systems and has accordingly been used in the social sciences for some years but a rigorous justification for adopting the analysis has not been undertaken. This paper discusses the appropriateness of applying cladistics analysis to financial systems, and then considers the appropriate methodology to be adopted for analysis of different financial events.

Keywords

Cladistics analysisComplex adaptive systemsFinancial risks

JEL classification

G22: Insurance • Insurance Companies • Actuarial Studies
Type
Paper
Information
Annals of Actuarial Science , Volume 13 , Issue 2 , September 2019 , pp. 360 - 377
Copyright
© Institute and Faculty of Actuaries 2018 

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