Banking Sector Interconnectedness: What is it, How Can We Measure it and Why Does it Matter?
9 Pages Posted: 20 Jun 2015
Date Written: June 18, 2015
Banks can be connected to each other in a number of ways. Greater interconnectedness means that stresses tend to spread more rapidly and extensively across the financial system. Various regulatory initiatives have been introduced to mitigate financial stability risks arising from interconnectedness. On some measures, such as interbank credit exposures, interconnectedness has decreased materially since the financial crisis.
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