Systemic Risk in Financial Networks: A Survey

Posted: 12 Aug 2021

See all articles by Matthew O. Jackson

Matthew O. Jackson

Stanford University - Department of Economics; Santa Fe Institute

Agathe Pernoud

Stanford University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 2021

Abstract

We provide an overview of the relationship between financial networks and systemic risk. We present a taxonomy of different types of systemic risk, differentiating between direct externalities between financial organizations (e.g., defaults, correlated portfolios, fire sales), and perceptions and feedback effects (e.g., bank runs, credit freezes). We also discuss optimal regulation and bailouts, measurements of systemic risk and financial centrality, choices by banks regarding their portfolios and partnerships, and the changing nature of financial networks.

Suggested Citation

Jackson, Matthew O. and Pernoud, Agathe, Systemic Risk in Financial Networks: A Survey (August 2021). Annual Review of Economics, Vol. 13, pp. 171-202, 2021, Available at SSRN: https://ssrn.com/abstract=3903106 or http://dx.doi.org/10.1146/annurev-economics-083120-111540

Matthew O. Jackson (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
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Stanford, CA 94305-6072
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HOME PAGE: http://www.stanford.edu/~jacksonm

Santa Fe Institute

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Agathe Pernoud

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
STANFORD, CA 94305-6072
United States

HOME PAGE: http://web.stanford.edu/~agathep

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