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Productivity vs. Evenness in the U.S. Financial Market: A Business Ecosystem Perspective

This paper starts by presenting an empirical finding in the U.S. stock market: Between 2001 and 2021, high productivity was achieved when the Shannon evenness—measuring the inverse of concentration—dropped. Conversely, when the Shannon evenness soared, productivity plunged. The same inverse relation...

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Detalles Bibliográficos
Autor principal: Fort, Hugo
Formato: Online Artículo Texto
Lenguaje:English
Publicado: MDPI 2023
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10378340/
https://www.ncbi.nlm.nih.gov/pubmed/37509976
http://dx.doi.org/10.3390/e25071029
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author Fort, Hugo
author_facet Fort, Hugo
author_sort Fort, Hugo
collection PubMed
description This paper starts by presenting an empirical finding in the U.S. stock market: Between 2001 and 2021, high productivity was achieved when the Shannon evenness—measuring the inverse of concentration—dropped. Conversely, when the Shannon evenness soared, productivity plunged. The same inverse relationship between evenness and productivity has been observed in several ecosystems. This suggests explaining this result by adopting the business ecosystem perspective, i.e., regarding the tangle of interactions between companies as an ecological network, in which companies play the role of species. A useful strategy to model such ecological communities is through ensembles of synthetic communities of pairwise interacting species, whose dynamics is described by the Lotka–Volterra generalized equations. Each community is specified by a random interaction matrix whose elements are drawn from a uniform distribution centered around 0. It is shown that the inverse relationship between productivity and evenness can be generated by varying the strength of the interaction between companies. When the strength increases, productivity increases and simultaneously the market evenness decreases. Conversely, when the strength decreases, productivity decreases and evenness increases. This strength can be interpreted as reflecting the looseness of monetary policy, thus providing a link between interest rates and market structure.
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spelling pubmed-103783402023-07-29 Productivity vs. Evenness in the U.S. Financial Market: A Business Ecosystem Perspective Fort, Hugo Entropy (Basel) Article This paper starts by presenting an empirical finding in the U.S. stock market: Between 2001 and 2021, high productivity was achieved when the Shannon evenness—measuring the inverse of concentration—dropped. Conversely, when the Shannon evenness soared, productivity plunged. The same inverse relationship between evenness and productivity has been observed in several ecosystems. This suggests explaining this result by adopting the business ecosystem perspective, i.e., regarding the tangle of interactions between companies as an ecological network, in which companies play the role of species. A useful strategy to model such ecological communities is through ensembles of synthetic communities of pairwise interacting species, whose dynamics is described by the Lotka–Volterra generalized equations. Each community is specified by a random interaction matrix whose elements are drawn from a uniform distribution centered around 0. It is shown that the inverse relationship between productivity and evenness can be generated by varying the strength of the interaction between companies. When the strength increases, productivity increases and simultaneously the market evenness decreases. Conversely, when the strength decreases, productivity decreases and evenness increases. This strength can be interpreted as reflecting the looseness of monetary policy, thus providing a link between interest rates and market structure. MDPI 2023-07-07 /pmc/articles/PMC10378340/ /pubmed/37509976 http://dx.doi.org/10.3390/e25071029 Text en © 2023 by the author. https://creativecommons.org/licenses/by/4.0/Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https://creativecommons.org/licenses/by/4.0/).
spellingShingle Article
Fort, Hugo
Productivity vs. Evenness in the U.S. Financial Market: A Business Ecosystem Perspective
title Productivity vs. Evenness in the U.S. Financial Market: A Business Ecosystem Perspective
title_full Productivity vs. Evenness in the U.S. Financial Market: A Business Ecosystem Perspective
title_fullStr Productivity vs. Evenness in the U.S. Financial Market: A Business Ecosystem Perspective
title_full_unstemmed Productivity vs. Evenness in the U.S. Financial Market: A Business Ecosystem Perspective
title_short Productivity vs. Evenness in the U.S. Financial Market: A Business Ecosystem Perspective
title_sort productivity vs. evenness in the u.s. financial market: a business ecosystem perspective
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10378340/
https://www.ncbi.nlm.nih.gov/pubmed/37509976
http://dx.doi.org/10.3390/e25071029
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