A financial network perspective of financial institutions’ systemic risk contributions

2016 ◽  
Vol 456 ◽  
pp. 183-196 ◽  
Author(s):  
Wei-Qiang Huang ◽  
Xin-Tian Zhuang ◽  
Shuang Yao ◽  
Stan Uryasev
Keyword(s):  
Financial Institutions ◽  
Systemic Risk ◽  
Financial Network

scholarly journals Systemic Risk and Stability in Financial Networks

2015 ◽  
Vol 105 (2) ◽  
pp. 564-608 ◽  
Author(s):  
Daron Acemoglu ◽  
Asuman Ozdaglar ◽  
Alireza Tahbaz-Salehi
Keyword(s):  
Phase Transition ◽  
Financial Institutions ◽  
Systemic Risk ◽  
Financial Stability ◽  
Financial System ◽  
Financial Networks ◽  
Financial Contagion ◽  
Financial Network

This paper argues that the extent of financial contagion exhibits a form of phase transition: as long as the magnitude of negative shocks affecting financial institutions are sufficiently small, a more densely connected financial network (corresponding to a more diversified pattern of interbank liabilities) enhances financial stability. However, beyond a certain point, dense interconnections serve as a mechanism for the propagation of shocks, leading to a more fragile financial system. Our results thus highlight that the same factors that contribute to resilience under certain conditions may function as significant sources of systemic risk under others. (JEL D85, E44, G21, G28, L14)

scholarly journals Assessing the risk of default propagation in interconnected sectoral financial networks

2019 ◽  
Vol 8 (1) ◽  
Author(s):  
Adrià Barja ◽  
Alejandro Martínez ◽  
Alex Arenas ◽  
Pablo Fleurquin ◽  
Jordi Nin ◽  
...  
Keyword(s):  
Financial Institutions ◽  
Systemic Risk ◽  
Network Theory ◽  
Real Data ◽  
Financial Networks ◽  
Financial Network ◽  
Full System ◽  
Complex Network Theory ◽  
The Impact ◽  
Shed Light

Abstract Systemic risk of financial institutions and sectoral companies relies on their inter-dependencies. The inter-connectivity of the financial networks has proven to be crucial to understand the propagation of default, as it plays a central role to assess the impact of single default events in the full system. Here, we take advantage of complex network theory to shed light on the mechanisms behind default propagation. Using real data from the BBVA, the second largest bank in Spain, we extract a financial network from customer-supplier transactions among more than $140\text{,}000$ 140 , 000 companies, and their economic flows. Then, we introduce a computational model, inspired by the probabilities of default contagion, that allow us to obtain the main statistics of default diffusion given the network structure at individual and system levels. Our results show the exposure of different sectors to default cascades, therefore allowing for a quantification and ranking of sectors accordingly. This information is relevant to propose countermeasures to default propagation in specific scenarios.

scholarly journals Systemic risk network of Chinese financial institutions

2018 ◽  
Vol 35 ◽  
pp. 190-206 ◽  
Author(s):  
Libing Fang ◽  
Boyang Sun ◽  
Huijing Li ◽  
Honghai Yu
Keyword(s):  
Financial Institutions ◽  
Systemic Risk

scholarly journals Would Hedge Fund Regulation Mitigate Systemic Risk? Direct vs. Indirect Regulation Approach

2017 ◽  
Vol 10 (8) ◽  
pp. 31
Author(s):  
Mehnaz Roushan Laura ◽  
Nafiz Ul Fahad
Keyword(s):  
Financial Institutions ◽  
Systemic Risk ◽  
Hedge Fund ◽  
Regulatory Change ◽  
Industry Growth ◽  
Large Complex ◽  
Fund Industry ◽  
Regulation Approach ◽  
The Waves ◽  
Regulatory Reforms

This paper presents the direct vs. indirect debate of hedge fund regulation and attempts to find which approach is better able to mitigate systemic risk that the industry poses to the economy. The waves of regulatory reforms and enhanced concern regarding investors protection have recently brought attention of the regulators to hedge fund regulation issue. But, many academics fear that direct intervention may limit industry growth and benefit. Addressing these concerns, this paper observes the systemic importance of hedge fund industry based on four criteria’s [size, leverage, interconnectedness to large complex financial institutions (LCFIs) and herding] and concludes that although this industry is still small in terms of size and leverage, their interconnectivity with LCFIs and potential herding make them systemically significant. Hence, regulation of hedge fund is necessary to restrict the transmission of systemic events. Analysing direct and indirect approaches, this paper suggests that the counterparties are best positioned to implement this regulatory change.

Systemic risk, financial markets, and performance of financial institutions

2016 ◽  
Vol 262 (2) ◽  
pp. 579-603 ◽  
Author(s):  
Edward M. H. Lin ◽  
Edward W. Sun ◽  
Min-Teh Yu
Keyword(s):  
Financial Markets ◽  
Financial Institutions ◽  
Systemic Risk ◽  
And Performance
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