Big Data

A Network Model Of Super-Systemic Crises

Date Added: Jan 2010
Format: PDF

Although the financial systems of advanced countries have weathered numerous shocks in recent years, the events triggered by the sub-prime crisis of August 2007 have been "Super-systemic" in scope, enveloping financial institutions across the major economies as well as far away Iceland and New Zealand. In this paper, the authors apply network techniques to develop a framework for analyzing financial contagion that isolate the probability of contagion from its potential spread. The results suggest that complex financial systems may be robust-yet-fragile in nature.