Spatial financeWhere capital meets hazard, exposure and transition
Network science for banking contagion
Network science maps how banks are linked through interbank lending, derivatives, common asset holdings, payment flows and shared service providers. It shows where a single failure could cascade, which institutions are central to the system, and why contagion differs from the sum of individual bank risks.
Network science and contagion study how the structure of connections among entities shapes the spread of failures, information and disease. It provides tools to analyse interdependent infrastructure, supply chains and financialسیستەمەکان. In financial stability, capital markets and investment and climate and hazards, network science identifies critical nodes and pathways through which shocks propagate across sectors. It informs targeted protection and diversification to limit cascades. The canonical description is onthe STEM Commons.
Interbank and counterparty contagion
Bilateral exposures are arranged as a network and default cascades are simulated to see how losses spread from an initial failure and which institutions amplify them.
Overlapping portfolios and fire sales
Common holdings of securities and loans are mapped so that forced sales by one bank can be traced through price falls to losses at other holders.
Operational dependency mapping
Banks, payment systems, cloud and software providers are represented as a multilayer network to find concentration points whose failure would affect many institutions together.
03Spatial finance
Settlement dependencies, and what fails with a node.
How a failure at one financial centre can spread through settlement links. Design links, not real dependencies.
Sixteen financial centres, and how a failure at one spreads through settlement links.Design links, not the real dependencies of any infrastructure.
04داتا
What the method consumes.
Datasets and records used by network science and contagion on this platform, with the role each plays and the label its values carry. Sources are listed inthe source register.
داتا
ڕۆڵ
ناونیشان
Supervisory large exposure and counterparty data
Bilateral links between institutions
ئامارە بڵاوکراوەکان
BIS international banking statistics
Cross-border exposures by country
ئامارە بڵاوکراوەکان
Payment system transaction data
Payment flow networks
چاودێریکراو
Registers of third-party arrangements
Service dependency links
REPORTED
05چاودێری
Network analysis.
The screen a team would use to follow this method: its measures, states and decisions. Names are examples and values are illustrative.
Network analysis
Banking · Network science for banking · Run R-5964
Single point of failureGRA · Banking Nexus
هێڵکاری پشتبەستن
nodes: assets · edges: dependencies
Most central nodes
N3
0.25
4
Critical
N4
0.16
12
ئاسایی
N5
0.17
11
ئاسایی
N6
0.18
8
ئاسایی
Cascade size under removal
Network analysis: the screen’s structure, terms and states for Banking.ناو و بەهای نموونەیی؛ دیزاینێکە، نەک تۆمار یان سیستەمی ڕاستەوخۆ.
06پشتڕاستکردنەوە
How results are checked.
Models are checked by reproducing observed cascades and outbreaks. Robustness of results to missing or uncertain links is tested.
بپشکنە
How it is done
Missing link sensitivity
Results are tested under alternative reconstructions of unobserved exposures, and the range is reported
Historical replay
Models are checked against known stress episodes and failures
Behavioural assumptions
Assumptions about liquidity hoarding, fire sales and recovery rates are stated and varied
Network data are often incomplete or confidential. Static network models may miss adaptive behaviour during cascades.
07Stress test
How a shock to assets becomes a system loss.
The equity the system loses after interbank contagion, against the initial hit, as leverage, interconnection and recovery rates change, the core of a macroprudentialتاقیکردنەوەی فشاری. Teaching model with stated illustrative values, not a prediction. The map on this page shows Western Europe; the model itself is not tied to a place.
کۆنترۆڵەکان
Fall in external assets
2.0%
Leverage (assets over equity)
10 times
Interbank share of assets
10%
Recovery on interbank claims
40%
Banks in the system
20
Core banks
20% of banks
خوێندنەوەکان
Equity lost to the initial shock
18.0%
Equity lost after contagion
45.0%
Added by contagion (DebtRank)
27.0 points
Banks in default
0
ژمارە، ڕێگا و سەرچاوەکان
Round
System equity lost (%)
Banks in default
0
18.00
0
1
28.80
0
2
35.28
0
3
39.17
0
4
41.50
0
5
42.90
0
6
43.74
0
7
44.24
0
8
44.55
0
9
44.73
0
10
44.84
0
11
44.90
0
12
44.94
0
13
44.96
0
14
44.98
0
15
44.99
0
16
44.99
0
17
45.00
0
18
45.00
0
19
45.00
0
20
45.00
0
21
45.00
0
22
45.00
0
23
45.00
0
24
45.00
0
25
45.00
0
26
45.00
0
27
45.00
0
28
45.00
0
29
45.00
0
30
45.00
0
ڕێگاکان
DebtRankBattiston and others (2012), Scientific Reports 2:541
Differential DebtRankBardoscia and others (2015), PLOS ONE 10
Contagion in financial networksGai and Kapadia (2010), Proc. R. Soc. A 466
Clearing in financial networksEisenberg and Noe (2001), Management Science 47
پەنجەی نادڵنیایی (مۆنتی کارلۆی پارامیتەر) Spiegelhalter, Pearson و Short (2011)، Visualising uncertainty about the future، Science 333
هەستیاریی یەک-یەک (تۆرناد) Saltelli و ئەوانی دیکە (2008)، Global Sensitivity Analysis: The Primer، Wiley
داتا
No observed data enters this model: it runs on the teaching values set by the controls, to be replaced with a programme’s own evidence.
How a shock to assets becomes a system loss. Illustrative teaching model: it runs on the values set by the controls, not on measured data. Methods: DebtRank (Battiston and others (2012), Scientific Reports 2:541); Differential DebtRank (Bardoscia and others (2015), PLOS ONE 10); Contagion in financial networks (Gai and Kapadia (2010), Proc. R. Soc. A 466).
Trace a shock in network science for banking contagion to the balance sheet.
Assembled from theNexus Standardsarea profileبانکداری: the shocks it names, theسیستەمەکانand sectors that carry the loss, the controls that dampen it and the data that observe it. Pick an initiating shock and step through the cascade to see which exposures it reaches and where losses could concentrate. The Map view places the run on an example geography with open data. Every weight is a stated assumption. An exercise, not a forecast, a valuation, a rating or investment advice. To model a place of your own choosing, open the fullSystem Builder.
What network science for banking contagion means for exposure, loss and capital.
The exposure, loss, scenario and capital views a risk officer, supervisor or ministry of finance would ask for, with the frameworks they report against. Structures follow supervisory and actuarial practice. Values are illustrative: never prices, ratings or advice.
Transmission channels
How a shock in network science for banking contagion reaches credit, market, underwriting, liquidity and operational risk, and feeds back.
Channel structure after the Basel Committee’s work on climate-related risk drivers and transmission channels; links shown are typical paths, not estimated exposures.
NGFS climate scenarios · Network for Greening the Financial SystemIFRS S2 Climate-related Disclosures · ISSBTCFD recommendations · Financial Stability Board TCFDPrinciples for the effective management of climate-related financial risks · Basel Committee on Banking Supervision
What are the limits of network science and contagion in this field?
Network data are often incomplete or confidential. Static network models may miss adaptive behaviour during cascades.
How are results checked?
Models are checked by reproducing observed cascades and outbreaks. Robustness of results to missing or uncertain links is tested.
Are the values on this page real?
The data names, roles and checks are real descriptions of practice. The canvas shows a design of the method’s use, not a run; no result is reported here.
Reportsis the Consortium’s quarterly publication. What you know about this subject can become evidence, a case or a correction in the next edition, credited to you and published under CC BY 4.0 where it is your own work.
Global Risks AllianceBanking Nexusئامادەیی دارایی و بیمەسیناریۆ و تاقیکردنەوەی گوشار
Editors and the expert reviewers named on each article decide what we publish. Funders and partners do not review or approve articles before publication.
This site uses only strictly necessary cookies to work and to remember your privacy choices. Nothing loads from other companies, and we never sell or share your personal information.
Details
This site uses only strictly necessary cookies to work and to remember your privacy choices. Nothing loads from other companies, and we never sell or share your personal information. We run no advertising. You can review your choices at any time through Privacy choices at the foot of every page.