Applying the Clique Percolation Method to analyzing cross-market branch banking network structure: the case of Illinois

This study applies the Clique Percolation Method (CPM) to an investigation of the changing spatial organization of the Illinois cross-market branch banking network. Nonoverlapping community detection algorithms assign nodes into exclusive communities and, when results are mapped, these techniques may generate spatially disjointed geographical regions, an undesirable characteristic for geographical study. Alternative overlapping community detection algorithms allow overlapping membership where a node can be a member of different communities. Such a structure simultaneously accommodates spatial proximity and spatial separation which occur with respect to a node in relation to other nodes in the system. Applying such a structure in geographical analysis helps preserve well-established principles regarding spatial relationships within the geography discipline. The result can also be mapped for display and correct interpretation. The CPM is chosen in this study due to the complete connection within cliques which simulates the practice by banking institutions of forming highly connected networks through multi-location operations in order to diversify their business and hedge against risks. Applying the CPM helps reveal the spatial pattern of branch banking connections which would otherwise be difficult to see. However, the CPM has been shown to not be among the best performing overlapping community detection algorithms. Future research should explore other possible algorithms for detecting overlapping communities. Detecting communities in a network only reveals certain characteristics of the spatial organization of the network, rather than providing explanation of the spatial-network patterns revealed. Full interpretation of the pattern must rely on the attribute data and additional information. This may illustrate the value of an integrated approach in geographical analysis using both social network analysis and spatial analysis techniques.

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