Financial networks and systemic risk vulnerabilities: A tale of Indian banks

Wasim Ahmad, Shiv Ratan Tiwari, Akshay Wadhwani, Mohammad Azeem Khan and Stelios Bekiros

Research in International Business and Finance, 2023, vol. 65, issue C

Abstract: This study identifies the nature and direction of unprecedented upheavals in the Indian banking sector which is linked to credit market asymmetry. A tail-driven network approach with a mixed sample of banks and firms exhibits the characteristics of the twin-balance-sheet syndrome. We construct the networks with a degree of interconnectedness at different quantiles and identify major systemic risk emitters and receivers. Furthermore, we find a spillover of the riskiness of deep-in-debt firms to banks. Smaller banking institutions evince a greater connection to banks and firms than larger ones. Our results are valuable for policymakers formulating financial stabilization policies and investors considering Indian markets for various opportunities.

Keywords: Systemic Risk; Financial Stability; Network Approach; Value at Risk; CoVaR; Indian Banks (search for similar items in EconPapers)
JEL-codes: C21 C51 C63 G01 G18 G32 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:65:y:2023:i:c:s0275531923000880

DOI: 10.1016/j.ribaf.2023.101962

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