Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures

Carlos Le�n, Ron Berndsen and Luc Renneboog
Authors registered in the RePEc Author Service: Carlos León

No 12254, Borradores de Economia from Banco de la Republica

Abstract: An interacting network coupling financial institutions� multiplex (i.e. multi-layer) and financial market infrastructures� single-layer networks gives an accurate picture of a financial system�s true connective architecture. We examine and compare the main properties of Colombian multiplex and interacting financial networks. Coupling financial institutions� multiplex networks with financial market infrastructures� networks removes modularity, which augments financial instability because the network then fails to isolate feedbacks and limit cascades while it retains its robust-yet-fragile features. Moreover, our analysis highlights the relevance of infrastructure-related systemic risk, corresponding to the effects caused by the improper functioning of FMIs or by FMIs acting as conduits for contagion.

Keywords: Multiplex networks; interacting networks; financial stability; contagion; financial market infrastru (search for similar items in EconPapers)
JEL-codes: D53 D85 G20 L14 (search for similar items in EconPapers)
Pages: 39
Date: 2014-10-14
New Economics Papers: this item is included in nep-ban and nep-hme
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000094:012254

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