Systemic Risk in Financial Networks: A Survey

By Matthew O. Jackson, Agathe Pernoud. Social Science Research Network, 2020

152 citations recorded by the source corpus.

We provide an overview of the relationship between financial networks and systemic risk. We present a taxonomy of different types of systemic risk, differentiating between direct externalities between financial organizations (e.g., defaults, correlated portfolios, fire sales), and perceptions and feedback effects (e.g., bank runs, credit freezes). We also discuss optimal regulation and bailouts, measurements of systemic risk and financial centrality, choices by banks regarding their portfolios and partnerships, and the changing nature of financial networks.

Subfields: Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/e0673f926209919c8a638966a2a2c0d7d0f520a9