Hierarchical financial structures with money cascade

23 Feb 2019  ·  Verma Mahendra K. ·

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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