Bankruptcy cascades in interbank markets.

We study a credit network and, in particular, an interbank system with an agent-based model. To understand the relationship between business cycles and cascades of bankruptcies, we model a three-sector economy with goods, credit and interbank market. In the interbank market, the participating banks...

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Autores principales:	Gabriele Tedeschi, Amin Mazloumian, Mauro Gallegati, Dirk Helbing
Formato:	article
Lenguaje:	EN
Publicado:	Public Library of Science (PLoS) 2012
Materias:	Medicine R Science Q
Acceso en línea:	https://doaj.org/article/558de39fd8ee41dcbed7f1f99e03abdb
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spelling	oai:doaj.org-article:558de39fd8ee41dcbed7f1f99e03abdb2021-11-18T08:03:07ZBankruptcy cascades in interbank markets.1932-620310.1371/journal.pone.0052749https://doaj.org/article/558de39fd8ee41dcbed7f1f99e03abdb2012-01-01T00:00:00Zhttps://www.ncbi.nlm.nih.gov/pmc/articles/pmid/23300760/?tool=EBIhttps://doaj.org/toc/1932-6203We study a credit network and, in particular, an interbank system with an agent-based model. To understand the relationship between business cycles and cascades of bankruptcies, we model a three-sector economy with goods, credit and interbank market. In the interbank market, the participating banks share the risk of bad debits, which may potentially spread a bank's liquidity problems through the network of banks. Our agent-based model sheds light on the correlation between bankruptcy cascades and the endogenous economic cycle of booms and recessions. It also demonstrates the serious trade-off between, on the one hand, reducing risks of individual banks by sharing them and, on the other hand, creating systemic risks through credit-related interlinkages of banks. As a result of our study, the dynamics underlying the meltdown of financial markets in 2008 becomes much better understandable.Gabriele TedeschiAmin MazloumianMauro GallegatiDirk HelbingPublic Library of Science (PLoS)articleMedicineRScienceQENPLoS ONE, Vol 7, Iss 12, p e52749 (2012)
institution	DOAJ
collection	DOAJ
language	EN
topic	Medicine R Science Q
spellingShingle	Medicine R Science Q Gabriele Tedeschi Amin Mazloumian Mauro Gallegati Dirk Helbing Bankruptcy cascades in interbank markets.
description	We study a credit network and, in particular, an interbank system with an agent-based model. To understand the relationship between business cycles and cascades of bankruptcies, we model a three-sector economy with goods, credit and interbank market. In the interbank market, the participating banks share the risk of bad debits, which may potentially spread a bank's liquidity problems through the network of banks. Our agent-based model sheds light on the correlation between bankruptcy cascades and the endogenous economic cycle of booms and recessions. It also demonstrates the serious trade-off between, on the one hand, reducing risks of individual banks by sharing them and, on the other hand, creating systemic risks through credit-related interlinkages of banks. As a result of our study, the dynamics underlying the meltdown of financial markets in 2008 becomes much better understandable.
format	article
author	Gabriele Tedeschi Amin Mazloumian Mauro Gallegati Dirk Helbing
author_facet	Gabriele Tedeschi Amin Mazloumian Mauro Gallegati Dirk Helbing
author_sort	Gabriele Tedeschi
title	Bankruptcy cascades in interbank markets.
title_short	Bankruptcy cascades in interbank markets.
title_full	Bankruptcy cascades in interbank markets.
title_fullStr	Bankruptcy cascades in interbank markets.
title_full_unstemmed	Bankruptcy cascades in interbank markets.
title_sort	bankruptcy cascades in interbank markets.
publisher	Public Library of Science (PLoS)
publishDate	2012
url	https://doaj.org/article/558de39fd8ee41dcbed7f1f99e03abdb
work_keys_str_mv	AT gabrieletedeschi bankruptcycascadesininterbankmarkets AT aminmazloumian bankruptcycascadesininterbankmarkets AT maurogallegati bankruptcycascadesininterbankmarkets AT dirkhelbing bankruptcycascadesininterbankmarkets
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Bankruptcy cascades in interbank markets.

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