Systemic Risk in Financial Networks: A Survey

Matthew Jackson and Agathe Pernoud ()
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Agathe Pernoud: Department of Economics, Stanford University, Stanford, California 94305, USA

Annual Review of Economics, 2021, vol. 13, issue 1, 171-202

Abstract: 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.

Keywords: financial networks; markets; systemic risk; financial crises; correlated portfolios; networks; banks; default risk; credit freeze; bank runs; shadow banking; supply chains; compression; financial bubbles (search for similar items in EconPapers)
JEL-codes: D85 F15 F34 F36 F65 G15 G32 G33 G38 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (58)

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Working Paper: Systemic Risk in Financial Networks: A Survey (2020)
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DOI: 10.1146/annurev-economics-083120-111540

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