Identifying Network-Dependent Risk Nodes in the Tehran and Iraq Stock Exchanges
Keywords:
systemic risk, network analysis, risk nodes, Tehran Stock Exchange, Iraq Stock Exchange, centralityAbstract
This study aims to identify and classify organizational nodes that contribute to systemic risk propagation in the Tehran and Baghdad stock exchanges from a network perspective to inform regulatory and corporate risk management priorities. This applied qualitative study sampled domain experts (13 for Tehran, 13 for Iraq) drawn from senior firm managers, financial analysts, and industry specialists using theoretical/snowball sampling. Semi-structured interviews were conducted, transcribed, and coded in MAXQDA. Key risk attributes were inductively extracted via thematic content analysis and mapped to network roles (central, bridging/intermediary, peripheral) to identify high-risk nodes within selected industries. The qualitative inference identified 19 high-risk nodes across the two exchanges (6 in Tehran, 13 in Iraq), unevenly distributed across industries with petrochemicals and transport exhibiting the greatest concentration of risk nodes. In Iran, firms such as a major petrochemical producer and a leading automotive manufacturer emerged as central or intermediary nodes with high systemic spillover potential; in Iraq, major telecom and large service-sector firms were inferred as central risk transmitters. Financial leverage, high indebtedness, low liquidity, managerial weaknesses, dependency on foreign inputs/technology, and extensive contractor linkages were inferred as principal predictors of a node’s propensity to transmit risk. Cross-country differences were inferred: Iraqi nodes showed greater sensitivity to external shocks (oil price, exchange rates) while Iranian nodes reflected structural vulnerabilities tied to leverage and supply dependencies. The network role (central vs. intermediary vs. peripheral) was inferred to moderate the magnitude of systemic impact. Network analysis effectively pinpoints firms whose failure or distress could propagate systemic risk; regulators and firms should prioritize monitoring and interventions for central and bridging nodes—focusing on deleveraging, liquidity buffers, enhanced reporting, and contingency planning—to mitigate network-level contagion.
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Copyright (c) 2025 Karrar Abood Hami Al Hafe, Bahareh Banitalebi Dehkordi, Mostaf Abd Alhussein Ali Almansoori, Masood Fooladi (Author)
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