Systemic Risk Definitions and Network Applications in Financial Systems

Authors

  • Hossein Dastkhan Kharazmi University

DOI:

https://doi.org/10.12928/ijiefb.v5i1.5968

Keywords:

Network Theory; Systemic Risk; Complex Systems; Prudential Policies; Casecading Failure.

Abstract

Introduction: Although the complex financial markets more often lead to more
social welfare in modern economic systems, they can also cause more severe
failures in the case of market downturns. Accordingly, Similar to other complex
systems, financial markets are also exposed to systemic risks. Considering
the importance of systemic risks in financial markets, we reviewed different
concepts, definitions, and the related principles of the systemic risk.
Purpose: Accordingly, similar to other complex systems, financial markets are
also exposed to systemic risks. Considering the importance of systemic risks in
financial markets, we reviewed different concepts, definitions, and the related
principles of the systemic risk. We also reviewed the main definitions of financial
systemic risk in different aspects.
Methodology: To analyze the systemic risks in the financial markets, we
introduce the main approaches of systemic risk analysis and elaborate financial
network analysis as one of the main approaches.
Findings: The results show that the systemic risk events can be related to the
buildup of small shock on different agents in the financial systems as well as
great shocks in one or a few numbers of financial agents.

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Published

2023-03-07

Issue

Vol. 5 No. 1 (2022)

Section

Articles

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