This exploratory study focuses on understanding the structure of networks of financial institutions in the Philippines. The literature notes that the financial sector occupies a central position within corporate networks. More importantly, the significance of deepening understanding of the connections within the financial sector stems from its role as an intermediate sector. The financial sector is crucial because of its role in promoting efficiency in other economic sectors. In fact, this sector occupies a unique position of influence regarding how the wealth of an economy is generated and allocated. Using a network lens, the structure of interrelationships via ownership is examined to draw insights related to corporate control, competition, and financial sector development. Data from the Philippine Stock Exchange on publicly listed financial companies and their networks is utilized to distinguish between subsidiary networks, ownership networks, and networks created by board interlocks. The subsidiary network of financial companies is found to be fragmented, and the connections among members of a group are closely knit. Subsidiary networks exhibit a hub-and-spoke structure, with a parent company in the center and subsidiaries around it. This centralized structure is thought to be used by investment companies to pool assets, cut costs, and improve efficiency. Financial institutions also diversify their portfolios by owning various companies not only in the financial sector but also in other sectors. Evidence of interconnections among companies in the financial sector and between financial companies and others is found. The networks formed via interlocks of board members and officers show a high proportion of triples, suggesting ease of reaching others within a short distance—a characteristic of the small-world phenomenon. The finding of an interconnected network, nearly a single-component network, also suggests that the extent of corporate control can be broad.
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