EconPapers    
Economics at your fingertips  
 

Financial stability in networks of financial institutions and market infrastructures

Ron Berndsen, Carlos León and Luc Renneboog

Journal of Financial Stability, 2018, vol. 35, issue C, 120-135

Abstract: An interdependent network coupling financial institutions’ multiplex (i.e. multi-layer) and financial market infrastructures’ single-layer networks gives a more accurate picture of a financial system's true connective architecture. We examine and compare the main properties of Colombian multiplex and interdependent 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 financial market infrastructures or by financial market infrastructures acting as conduits for contagion.

Keywords: Systemic risk; Cross-system risk; Settlement risk; Interdependent networks; Contagion (search for similar items in EconPapers)
JEL-codes: D53 D85 G01 G20 L14 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1572308916302340
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Financial stability in networks of financial institutions and market infrastructures (2018) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:35:y:2018:i:c:p:120-135

DOI: 10.1016/j.jfs.2016.12.007

Access Statistics for this article

Journal of Financial Stability is currently edited by I. Hasan, W. C. Hunter and G. G. Kaufman

More articles in Journal of Financial Stability from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

 
Page updated 2025-03-23
Handle: RePEc:eee:finsta:v:35:y:2018:i:c:p:120-135