Arbeitspapier
Regulating financial networks under uncertainty
I study the problem of regulating a network of interdependent financial institutions that is prone to contagion when there is uncertainty regarding its precise structure. I show that such uncertainty reduces the scope for welfare-improving interventions. While improving network transparency potentially reduces this uncertainty, it does not always lead to welfare improvements. Under certain conditions, regulation that reduces the risk-taking incentives of a small set of institutions can improve welfare. The size and composition of such a set crucially depend on the interplay between (i) the (expected) susceptibility of the network to contagion, (ii) the cost of improving network transparency, (iii) the cost of regulating institutions, and (iv) investors' preferences.
- ISBN
-
978-92-9472-128-0
- Language
-
Englisch
- Bibliographic citation
-
Series: ESRB Working Paper Series ; No. 107
- Classification
-
Wirtschaft
Policy Objectives; Policy Designs and Consistency; Policy Coordination
Financial Crises
- Subject
-
Financial networks
contagion
policy design under uncertainty
- Event
-
Geistige Schöpfung
- (who)
-
Ramírez, Carlos
- Event
-
Veröffentlichung
- (who)
-
European Systemic Risk Board (ESRB), European System of Financial Supervision
- (where)
-
Frankfurt a. M.
- (when)
-
2020
- DOI
-
doi:10.2849/331905
- Handle
- Last update
-
10.03.2025, 11:41 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ramírez, Carlos
- European Systemic Risk Board (ESRB), European System of Financial Supervision
Time of origin
- 2020
Other Objects (12)
Regulating Renewable Resources under Uncertainty
Financial Decisions of Households under Uncertainty
Optimization of temporal networks under uncertainty
Topics of financial mathematics under model uncertainty
Financial asset price bubbles under model uncertainty
Evolutionary design of corporate networks under uncertainty
Evolutionary design of corporate networks under uncertainty
Microeconomic theory of financial markets under volatility uncertainty
Regulating Financial Conglomerates
Data-driven Optimization under Uncertainty for Power Networks
Control strategies for transport networks under demand uncertainty
Optimisation under Data Uncertainty in Wireless Communication Networks
Regulating Renewable Resources under Uncertainty
Financial Decisions of Households under Uncertainty
Optimization of temporal networks under uncertainty
Topics of financial mathematics under model uncertainty
Financial asset price bubbles under model uncertainty
Evolutionary design of corporate networks under uncertainty
Evolutionary design of corporate networks under uncertainty
Microeconomic theory of financial markets under volatility uncertainty
Regulating Financial Conglomerates
Data-driven Optimization under Uncertainty for Power Networks
Control strategies for transport networks under demand uncertainty
Optimisation under Data Uncertainty in Wireless Communication Networks
Regulating Renewable Resources under Uncertainty
Financial Decisions of Households under Uncertainty
Optimization of temporal networks under uncertainty
Topics of financial mathematics under model uncertainty
Financial asset price bubbles under model uncertainty
Evolutionary design of corporate networks under uncertainty
Evolutionary design of corporate networks under uncertainty
Microeconomic theory of financial markets under volatility uncertainty
Regulating Financial Conglomerates
Data-driven Optimization under Uncertainty for Power Networks
Control strategies for transport networks under demand uncertainty