This research project models financial interdependencies in the form of dynamic networks and propose policy and risk measurement tools to pre-identify contagion.
Financial markets consist of sets of institutional entities in the form of large traders, banks, corporate firms, and countries that carry out business with each other, forming networks. The financial standing of these networks, and how integrated they are, positively or negatively reinforce each other but may only be known imperfectly. This is a problem, since such complex interactions may lead to global (in)stability. The policy and risk measurement tools developed by this project pre-identify contagion and control these interdependencies before they become a threat to the global community.
