Banks are starting to care more about who you know than how much money you actually have when they’re deciding on your loan.
March 16, 2026
Original Paper
Topology as information: Network effects in corporate lending
arXiv · 2603.12417
The Takeaway
We usually assume creditworthiness is based on how much money or collateral a company has. This study shows that network 'topology' has become a primary proxy for trust, effectively replacing physical collateral even for small businesses.
From the abstract
A central challenge in financial economics is understanding how credit networks form under informational noise. We introduce the concept of topological capital, arguing that banks increasingly rely on topological certification, interpreting a borrower's connectivity as a primary proxy for creditworthiness. Using a novel dataset of bank-firm relationships manually extracted from Italian financial statements, we implement a multi-stage empirical framework, benchmarking empirical patterns against a