Network theory allows systemic risk assessment of banks, paper argues
New model gives useful insights for regulators, author argues
It is possible to use network theory to assess how much risk individual banks present to other banks in Europe, a paper published this month by the European Central Bank (ECB) argues.
In Systemic risk rankings and network centrality in the European banking sector, Valerie De Bruyckere presents a methodology to assess the systemic risk presented by different European banks using publicly available information.
The paper uses a Bayesian Model Averaging of Locally Weighted Regression Models (BMA
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