Arbeitspapier
Uncertainty in an Interconnected Financial System, Contagion, and Market Freezes
This paper studies contagion and market freezes caused by uncertainty in financial network structures and provides theoretical guidance for central banks. We establish a formal model to demonstrate that, in a financial system where financial institutions are interconnected, a negative shock to an individual financial institution could spread to other institutions, causing market freezes because of creditors' uncertainty about the financial network structure. Central bank policies to alleviate market freezes and contagion, such as information policy, bailout policy and the lender of last resort policy, are examined.
- Language
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Englisch
- Bibliographic citation
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Series: Queen's Economics Department Working Paper ; No. 1308
- Classification
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
- Subject
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Interconnection
Market Freezes
Contagion
Financial Crises
- Event
-
Geistige Schöpfung
- (who)
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Li, Mei
Milne, Frank
Qui, Junfeng
- Event
-
Veröffentlichung
- (who)
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Queen's University, Department of Economics
- (where)
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Kingston (Ontario)
- (when)
-
2013
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
Data provider
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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
- Li, Mei
- Milne, Frank
- Qui, Junfeng
- Queen's University, Department of Economics
Time of origin
- 2013
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