The Heat Kernel Expansion: Curvature for Shock Detection in Higher-Order Financial Networks

Physics > Computational Physics [Submitted on 18 Jun 2026] Title:The Heat Kernel Expansion: Curvature for Shock Detection in Higher-Order Financial Networks View PDF HTML (experimental)Abstract:This work follows the evolution of financial networks in Norway over a period of nine years at a monthly rate. The data consist of board directors and their affiliations to companies, which we model as simplicial complexes. In this framework, directors are represented as nodes and companies as faces of the complex. To characterize the latter, we focus on three topological measures: the Euler characteristic, computed through the Betti numbers, torsion computed through the reduced determinant of the higher-order Laplacians, and higher-order clustering coefficients. The first two fail to capture the effect of imposed law on representation, unlike our notion of curvature which is a geometrical measure computed from the coefficients of the series expansion of the heat kernel in powers of time, which is our major contribution in this work. In particular, the Euler characteristic integrates curvature, and thus local information is lost. Subsequently, not every topological measure can reliably capture shocks in networks. Further, the number of spanning trees may undergo significant changes at the lowest order, yet these changes need not be reflected in the torsion. Conversely, the change in the curvature revealed variation in the board interlock due to legislation, and serves as a sensitive measure for detecting shocks in networks. Inflection points in curvature are associated with external forcing, and minima with shock arrival times. Sharp transitions are also observed in the components of torsion, while smooth changes are observed in higher-order clustering. Current browse context: physics.comp-ph Change to browse by: References & Citations Loading... Bibliographic and Citation Tools Bibliographic Explorer (What is the Explorer?) Connected Papers (What is Connected Papers?) Litmaps (What is Litmaps?) scite Smart Citations (What are Smart Citations?) Code, Data and Media Associated with this Article alphaXiv (What is alphaXiv?) CatalyzeX Code Finder for Papers (What is CatalyzeX?) DagsHub (What is DagsHub?) Gotit.pub (What is GotitPub?) Hugging Face (What is Huggingface?) ScienceCast (What is ScienceCast?) Demos Recommenders and Search Tools Influence Flower (What are Influence Flowers?) CORE Recommender (What is CORE?) arXivLabs: experimental projects with community collaborators arXivLabs is a framework that allows collaborators to develop and share new arXiv features directly on our website. Both individuals and organizations that work with arXivLabs have embraced and accepted our values of openness, community, excellence, and user data privacy. arXiv is committed to these values and only works with partners that adhere to them. Have an idea for a project that will add value for arXiv's community? Learn more about arXivLabs.