Financial systems of different countries have become more interconnected in recent years. This financial integration allows for a better diversification of risks. However, it is also a source of systemic risk, as cross-country interlinkages can easily transmit shocks from one banking system in one country to another banking system in another country. Thus, internationally connected banking systems entail a higher risk of spreading local shocks to a supranational or even worldwide level. The recent financial crisis has revealed how the complexity interlinkages in banking can contribute to the transmission of shocks. As the stability of one bank is determined by its interlinkages to other banks, it cannot be assessed in isolation. Thus, in order to measure systemic stability, one has to take into account the whole network structure. The network research focuses on the transmission of shocks through network linkages and the effect of the network structure on the stability of the financial system.
Published papers
Acemoglu, D., A. Ozdaglar, and A. Tahbaz-Salehi (2015). Systemic risk and stability in financial networks. American Economic Review, vol. 105(2): 564–608.
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Working and discussion papers
Abad, J., M. D’Errico, N. Killeen, V. Luz, T. Peltonen, R. Portes, and T. Urbano (2017). Mapping the interconnectedness between EU banks and shadow banking entities. CEPR Working Paper 11919.
Acalin, J. (2022). The global financial cycle meets global imbalances. Available at julienacalin.com
Ahnert, T., Machado, C., and Pereira, A.(2023). Trading for bailouts. CEPR Discussion Paper No. DP17812.
Aldasoro, I., D. Delli Gatti, and E. Faia (2016). Bank networks: contagion, systemic risk and prudential policy. BIS Working Papers No 597.
Anon. (2019). An examination of initial experience with the global systemically important bank framework. BCBS Working Paper No. 34.
Avdjiev, S., and E. Takáts (2016). Monetary Policy Spillovers and Currency Networks in Cross-Border Bank Lending. BIS Working Paper No 549.
Bernard, B., A. Capponi, and J. E. Stiglitz (2017). Bail-ins and Bail-outs: Incentives, Connectivity, and Systemic Stability. NBER Working Paper No. 23747.
Bolton, P., and M. Oehmke (2018). Bank Resolution and the Structure of Global Banks. CEPR Discussion Paper DP13032.
Brunnermeier, M., L. Clerc, Y. El Omari, S. Gabrieli, S. Kern, C. Memmel, T. Peltonen, N.Podlich, M.Scheicher, and G. Vuillemey (2014). Assessing contagion risks from the CDS market. European Systemic Risk Board Occasional Paper Series 4/2013.
Calomiris, C. W., M. S. Jaremski, D. C. Wheelock (2019). Interbank Connections, Contagion and Bank Distress in the Great Depression. NBER Working Paper No. 25897.
Caravello, T., P. Martinez-Bruera, and I. Werning (2023). Dollarization Dynamics. NBER Working Paper No. 31296.
Cerutti, E. M., and H. Zhou (2017). The Global Banking Network in the Aftermath of the Crisis: Is There Evidence of De-globalization? IMF Working Paper No. 17/232.
Cerutti, E. M., and H. Zhou (2018). The Global Banking Network: What is Behind the Increasing Regionalization Trend? Working Paper No. 18/46.
Chakraborty, I., Chityala, S., Javadekar, A., and Ramcharan, R. (2022). Financial Integration through Production Available at https://www.fdic.gov/analysis/cfr/bank-research-conference/annual-21st/papers/chakraborty-paper.pdf.
Chinn, M. D. and H. Ito (2023). Measuring Financial Integration: More Data, More Countries, More Expectations. NBER Working Paper No. 31505.
Cohen-Cole, E., E. Patacchini, and Y. Zenou (2011). Systemic risk and network formation in the interbank market. CEPR Discussion Papers 8332.
Craig, B.R., M. Koetter, and U. Kruger (2014). Interbank lending and distress: Observables, unobservables, and network structure. Working Paper 1418, Federal Reserve Bank of Cleveland.
Cull, R., M. S. Martinez Peria, and J. Verrier (2017). Bank Ownership: Trends and Implications. IMF Working Paper No. 17/60.
Demange, G. (2015). Contagion in financial networks: A threat index. CESifo Working Paper No. 5307.
Faia, E., S. Laffitte, and G. Ottaviano (2018). Foreign Expansion, Competition and Bank Risk. CEPR Discussion Papers No. 13150.
Flood, M. D., D. Y. Kenett, R. L. Lumsdaine, and J. K. Simon (2017). The Complexity of Bank Holding Companies: A Topological Approach. NBER Working Paper No. 23755.
Florez-Orrego, S. , M. Maggiori, J. Schreger, Z. Sun, S. Tinda (2023). Global Capital Allocation.
Gabrieli, S., and C.-P. Georg (2014). A network view on interbank market freezes. Deutsche Bundesbank Discussion Paper 44/2014.
Garratt, R., L. Mahadeva, and K. Svirydzenka (2011). Mapping systemic risk in the international banking network. Bank of England Working Paper 413.
Hale, G., T. Kapan and C. Minoiu (2016). Crisis Transmission in the Global Banking Network. IMF Working Paper No. 16/91.
Horn, C., and C. Trebesch (2023). China as an International Lender of Last Resort. Kiel Working Papers No. 2244.
Liedorp, F.R., L. Medema, M. Koetter, R.H. Koning, and I. van Lelyveld (2010). Peer monitoring or contagion? Interbank market exposure and bank risk. DNB Working Papers 248.
Lin, C., L. Ross, and Z. Wang (2017). Acquiring Banking Networks. NBER Working Paper No. 23469.
Lumsdaine, R., D. Rockmore, N. Foti, G. Leibon and J.D. Farmer (2016). The Intrafirm Complexity of Systemically Important Financial Institutions. Available on SSRN.
Macchiati, V., G. Brandi, G. Cimini, G. Caldarelli, D. Paolotti, T. Di Matteo (2019) Systemic liquidity contagion in the European interbank market. Available at arXiv:1912.13275
Markose, S., S. Giansante, N. A. Eterovic, and M. Gatkowski (2017). Early Warning and Systemic Risk in Core Global Banking: Balance Sheet Financial Network and Market Price-based Methods. Available on SSRN.
Morrison, A., M. Vasios, M. Wilson, and F. Zikes (2017). Identifying contagion in a banking network. Bank of England Working Paper No. 642.
Paravisini, D., and P. Schnabl (2017). Specialization in Bank Lending: Evidence from Exporting Firms. CEPR Discussion Paper 12156.
Ziya Gorpe, M., G. Covi, C. Kok (2019). CoMap: Mapping Contagion in the Euro Area Banking Sector. IMF Working Paper No. 19/102.
Other articles
Bos, J.W., M.G. Contreras, and S. Kleimeier (2013). The evolution of the global corporate loan market and syndicate formation: A network perspective. Presented at the 35th DRUID Celebration Conference 2013, Barcelona, Spain, June 17-19.
David, A. and A. Lehar (2015). Imperfect renegotiation in interbank financial networks. Mimeo.
Haldane, A.G. (2009). Rethinking the financial network. Speech delivered at the Financial Student Association, Amsterdam.
Hale, G., T. Kapan, and C. Minoiu (2013). Crisis transmission in the global banking network. Mimeo.
Wang, J.J. (2015). Distress dispersion and systemic risk in networks. Available at SSRN: http://ssrn.com/abstract=2588910.