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idalab seminar #17 - Philippa Sigl-Glöckner

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The Global Financial Crisis of 2007-2008 did not only cause the biggest loss in output post World War II, its far-reaching ripple effects also revealed that interdependencies between individual players in financial systems were much higher than previously assumed. This led policy makers to push the reset button for much of macroeconomic research. The analysis of financial systems and the development of empirical approaches became top of the agenda. One of these new empirical approaches was interactive data visualisation. In my research, I review the state of financial systems visualisation, identify gaps, and set out design principles. I introduce three applications, showing how interactive data visualisation can help to analyse Interbank Networks, unconventional monetary policy and the secular rise of non-bank finance.

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idalab seminar #17 - Philippa Sigl-Glöckner

  1. 1. © 2018 | idalab GmbH | Potsdamer Straße 68 | 10785 Berlin | idalab.de page 1 | confidential Agency for Data Science Machine learning & AI Mathematical modelling Data strategy Philippa Sigl-Glöckner Interactive data visualisation – Can new empirical approaches in macroeconomic research reveal the true nature of our financial systems? idalab seminar #17 | March 7th 2019
  2. 2. Visualising Financial Systems Philippa Sigl-Gl¨ockner philippa@sigl-gloeckner.de idalab, 7. March 2019 Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 1 / 25
  3. 3. Outline 1 Background 2 Implementation 3 Summary Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 2 / 25
  4. 4. Outline 1 Background 2 Implementation 3 Summary Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 3 / 25
  5. 5. Background Implementation Summary The issue with macroeconomics Source: Blog Lars Psyll Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 4 / 25
  6. 6. Background Implementation Summary Black hole financial system “The financial system matters - a lot. [...] What we have learned about the financial system is that the problem is in the plumbing and that we have to understand the plumbing.” –Olivier Blanchard, Chief Economist of the International Monetary Fund during the financial crisis 2008/09 [Blanchard, 2013] Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 5 / 25
  7. 7. Background Implementation Summary Statisticial nightmare • Wide and small datasets (lots of dimensions, short timeseries) • The object of analysis is constantly changing; observation itself may change the object (Heisenbug!) • Crappy data, distorted by accounting shenanigans • Ideally: Live decision making Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 6 / 25
  8. 8. Background Implementation Summary Old idea: Drawing financial circuits Example: Circuit flow of money in the US Economy Source: Foster, Circuit Flow of Money, The American Economic Review, 1922 Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 7 / 25
  9. 9. Background Implementation Summary However, visualisations as part of financial systems analysis are still rare Essential components are still missing on an infrastructural, conceptional and implementation level: • For visualising markets, there is no domain specific software allowing for the efficient generation of financial networks • For visualising individual entities, we miss a visual encoding of balance sheets • There is no visualisation of the financial system of the Euro Area as a whole Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 8 / 25
  10. 10. Outline 1 Background 2 Implementation 3 Summary Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 9 / 25
  11. 11. Background Implementation Summary The Interbank Network Visualiser: Self-service tool for visualising networks based on csv data Interface Local server Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 10 / 25
  12. 12. Background Implementation Summary The Interbank Network Visualiser Structure Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 11 / 25
  13. 13. Background Implementation Summary The Interbank Network Visualiser Scope for future work • GUI for launching the software • More flexibility for format of input data • Enhanced ability to deal with networks of varying size • ’Intelligent’ network layout algorithm Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 12 / 25
  14. 14. Background Implementation Summary Balance Sheet Visualisation Today Source: Deutsche Bank Figure: Deutsche Bank balance sheet 2017 Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 13 / 25
  15. 15. Background Implementation Summary Balance Sheet Visualisation Interface Website Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 14 / 25
  16. 16. Background Implementation Summary Balance Sheet Visualisation Scope for future work • Development of a Sankey library giving fine grained control over the layout to the user • Node placement algorithm: Reducing overlaps and crossings while minimising whitespace and changes in position • Further analytical features • Automated node ordering (according to levels) Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 15 / 25
  17. 17. Background Implementation Summary Visualising the European financial system Mapping tectonic shifts Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 16 / 25
  18. 18. Background Implementation Summary Euro Area financial system visualisation Interface Website Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 17 / 25
  19. 19. Background Implementation Summary Euro Area financial system visualisation Scope for future work • Visual representation of change in node size • Snap shot capability • Node placement algorithm: Reducing overlaps and crossings while minimising whitespace and changes in position • Further analytical features, specific to networks • Improved input data Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 18 / 25
  20. 20. Outline 1 Background 2 Implementation 3 Summary Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 19 / 25
  21. 21. Background Implementation Summary Design principles for visualising financial systems Interface • Filtering and highlighting • Control • Analytics • Context • Scaling • Change • Pattern recognition • Labels Software architecture and tools • Compatibility with institutional requirements (where relevant) • Security • Separation of concerns • Simplicity of architecture • Ease of error spotting and tracing • Right tool for the right purpose • Open source Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 20 / 25
  22. 22. Background Implementation Summary What could be next I: Mapping the European shadow banking system Figure: The Chinese shadow banking system [Ehlers, 2018] Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 21 / 25
  23. 23. Background Implementation Summary What could be next II: Visualising agent based models Figure: Schematic of an agent based model [Turrell, 2016] Figure: A day in the life of Americans [Yau, 2015] Link Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 22 / 25
  24. 24. Background Implementation Summary What could be next III: A better way to code Observable by Mike Bostock https://beta.observablehq.com/ Link Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 23 / 25
  25. 25. Background Implementation Summary References Blanchard, O.: Olivier Blanchards Five Lessons for Economists From the Financial Crisis, Wall Street Journal 01-04-2013 Trichet, J.: Opening address at the ECB Central Banking Conference, Frankfurt, 18 November 2010 Ehlers, T., Kong, S., Zhu, F.: Mapping shadow banking in China: structure and dynamics. BIS Working Paper 701, 2018 Turrell, A. E.; Agent-Based Models: Understanding the Economy from the Bottom Up (December 16, 2016). Bank of England Quarterly Bulletin 2016 Q4 Yau, N.; A Day in The Life of Americans (December 15, 2015), https://flowingdata.com/2015/12/15/a-day-in-the-life-of-americans/ Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 24 / 25
  26. 26. Background Implementation Summary Thank you Contact: philippa@sigl-gloeckner.de Website: philippasigl.com Github: github.com/philippasigl Philippa Sigl-Gl¨ockner Data visualisation idalab, 7. March 2019 25 / 25

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