Banks and financial institutions are linked by financial obligations that form complex networks. These networks serve risk-sharing purposes and become channels of contagion in the event of liquidity and insolvency shocks. The consequent processes of loss diffusion are usually non-linear and, in some cases, exhibit phase transitions from situations in which there is no default contagion to a systemic crisis that involves the entire network. In this paper, I discuss the results of recent numerical simulations of contagion processes in financial networks that present some unexpected linearities

Linearities, Non-Linearities and Phase Transitions in Loss Diffusion Processes in Financial Networks

Eboli Mario
2020-01-01

Abstract

Banks and financial institutions are linked by financial obligations that form complex networks. These networks serve risk-sharing purposes and become channels of contagion in the event of liquidity and insolvency shocks. The consequent processes of loss diffusion are usually non-linear and, in some cases, exhibit phase transitions from situations in which there is no default contagion to a systemic crisis that involves the entire network. In this paper, I discuss the results of recent numerical simulations of contagion processes in financial networks that present some unexpected linearities
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11564/789772
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