The Complex Systems and Networks Seminar is held every Thursday at 14.00. The seminar is a combination of scholars talking about their own work and journal club presentations. Everybody is welcome to attend the seminar. Please do not hesitate to contact the seminar organizers, Mikko Kivelä and Alex Jung, if you have any questions or suggestions.
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October 26, 2017 @ 14.15 - 15.00
Seminar room 1021-1022, TUAS-building
Presenter: Alexander Gurevich
Financial institutions form multilayer networks by engaging in contracts with each other and by holding exposures to common assets. As a result, the default probability of one institution depends on the default probability of all of the other institutions in the network. Here, we show how small errors on the knowledge of the network of contracts can lead to large errors in the probability of systemic defaults. From the point of view of financial regulators, our findings show that the complexity of financial networks may decrease the ability to mitigate systemic risk, and thus it may increase the social cost of financial crises.
Link to the article: