An endogenous model of the credit network

• An endogenous credit network model of firm–bank agents is constructed.
• The interfirm market, firm–bank market and interbank market are introduced.
• The upper tail of firm size distribution can be well fitted with a power-law.
• The bank size distribution is lognormal with a power-law tail.
• Bank in-degrees fall into a two-power-law distribution.

In this paper, an endogenous credit network model of firm–bank agents is constructed. The model describes the endogenous formation of firm–firm, firm–bank and bank–bank credit relationships. By means of simulations, the model is capable of showing some obvious similarities with empirical evidence found by other scholars: the upper-tail of firm size distribution can be well fitted with a power-law; the bank size distribution can be lognormally distributed with a power-law tail; the bank in-degrees of the interbank credit network as well as the firm–bank credit network fall into two-power-law distributions.