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Title: Systemic Risk in Financial Networks: A Survey
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.
Award ID(s):
Publication Date:
Journal Name:
Annual Review of Economics
Page Range or eLocation-ID:
171 to 202
Sponsoring Org:
National Science Foundation
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