Systemic Risk in Financial Networks: A Survey
Posted: 12 Aug 2021
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Systemic Risk in Financial Networks: A Survey
Annual Review of Economics, Vol. 13, pp. 171-202, 2021
Posted: 12 Aug 2021
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Systemic Risk in Financial Networks: A Survey
Number of pages: 49
Posted: 24 Aug 2020
Last Revised: 26 Mar 2021
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Date Written: August 2021
Abstract
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.
Suggested Citation: Suggested Citation
Jackson, Matthew O. and Pernoud, Agathe, Systemic Risk in Financial Networks: A Survey (August 2021). Annual Review of Economics, Vol. 13, pp. 171-202, 2021, Available at SSRN: https://ssrn.com/abstract=3903106 or http://dx.doi.org/10.1146/annurev-economics-083120-111540
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