Through a Glass Darkly: Tracing the Mundane Organisation of a Bubble Network

Despite the scholarly attention given to the causes of the Financial Crisis 2007-2009, there has been no research on the mundane organisation of the CDO (Collateralized Debt Obligations) market. By studying connections between supply-side actors, our paper examines structural developments in the CDO market. We treat the CDO as a network product, thus viewing the product as interface through which parties involved in the production interact. Our database contains interactions between supply-side actors involved in 373 US CDOs which are analysed using network analysis tools to draw out longitudinal structural developments and the centrality of actors. Our findings highlight how activity in the supply-side exploded after 2003 through the entrance of new actors as the market scaled up; however, actors present before 2003 remain central at the height of market activity in 2006/07, whereas new entrants appear to gain little traction. Crucially, the network exhibits a core-periphery structure centred on actors linked to mundane organising functions that have received little attention in previous studies, but where their central position may have contributed to the poor CDO market performance and financial crisis.