Hierarchical Financial Structures with Money Cascade
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, it exhibits Maxwellian distribution at individual scales.
I am thankful to Anirban Chakraborti, Supratik Banerjee, Andre Sukhanovskii, Rodion Stepanov, Franck Plunian, Abhishek Kumar, and Kiran Sharma for very useful discussions and ideas.
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