Risk of banking crisis increases with ‘network centrality’, ECB paper argues
Measurements of a bank’s interconnectedness help predict crises, authors say
The more central a country's banking sector is to the network formed by the wider domestic economy, the greater its risk of undergoing a crisis, a working paper published this month by the European Central Bank (ECB) argues.
In Interconnectedness of the banking sector as a vulnerability to crises, Tuomas Peltonen, Michela Rancan and Peter Sarlin create a stylised model of the interconnectedness of the banking sectors of 14 European economies.
Their research builds on a 2014 paper by Rancan and
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