A SEIQRS Model for Interbank Financial Risk Contagion and Rescue Strategies in Complex Networks

Bo Sun () and Yujia Liu
Additional contact information
Bo Sun: School of Statistics and Mathematics, Central University of Finance and Economics, Beijing 100081, China
Yujia Liu: School of Finance, Central University of Finance and Economics, Beijing 100081, China

Mathematics, 2025, vol. 13, issue 19, 1-16

Abstract: Our paper employs complex network theory and the SEIQRS epidemic model based on the dynamics of differential equations to investigate the contagion mechanisms of financial risk within banking systems and to evaluate rescue strategies. A scale-free interbank network of 36 listed Chinese banks is constructed using the minimum-density method. Under the SEIQRS epidemic model, we simulate risk propagation pathways and analyze how key parameters affect systemic risk. Simulation of various rescue interventions demonstrates that, building on the existing support framework, coordinated adjustment of the quarantine rate, exposed-to-infectious transition rate, and quarantine-recovery rate can substantially curb the spread of risk. Among the strategies tested, the high-degree-first rescue strategy yields the best outcomes but requires precise timing, specifically, implementation at the first non-worsening time point. Finally, we offer some policy recommendations, which provide theoretical support and practical enlightenment for preventing cross-system financial risk contagion.

Keywords: scale-free network; epidemic model; financial risk contagion; rescue strategy; systemic risk (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7390/13/19/3059/pdf (application/pdf)
https://www.mdpi.com/2227-7390/13/19/3059/ (text/html)

Related works:
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:gam:jmathe:v:13:y:2025:i:19:p:3059-:d:1756085

Access Statistics for this article

Mathematics is currently edited by Ms. Emma He

More articles in Mathematics from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().