Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures

Carlos León, Ron Berndsen and Luc Renneboog

Borradores de Economia from Banco de la Republica de Colombia

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

JEL-codes: D53 D85 G20 L14 (search for similar items in EconPapers)
Pages: 39
Date: 2014-10
New Economics Papers: this item is included in nep-ban and nep-net
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

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https://doi.org/10.32468/be.848 (application/pdf)

Related works:
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
Working Paper: Financial Stability and Interacting Networks of Financial Institutions and Market Infrastructures (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:bdr:borrec:848

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