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) 
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 ().