GRA · Financial Stability
Spatial financeWhere capital meets hazard, exposure and transition
STEM foundation of Financial Stability
The science, technology, engineering and mathematics Financial Stability rests on. Each method has a canonical page in the STEM Commons, hosted by the Global Centre for Risk and Innovation (GCRI), and a page here on how it is applied in this field.
Five pages under STEM foundation of Financial Stability.
- 01MethodFinancial economics and macro-finance at Financial Stability
- 02MethodNetwork science and contagion for financial stability
- 03MethodComplex systems and agent-based modelling for financial stability
- 04MethodScenario design and stress testing for financial stability
- 05MethodEconometrics for financial stability
The methods behind the field.
- 01Financial economics and macro-financeRun incentives in funds and banks · Leverage cycles · Implicit guaranteesSteward · Financial StabilityApplied here
- 02Network science and contagionInterbank contagion simulation · Common exposure networks · Multilayer networksSteward · Systems Science and ModellingApplied here
- 03Complex systems and agent-based modellingAgent-based market models · Early warning of regime shifts · Feedback loop mappingSteward · Systems Science and ModellingApplied here
- 04Scenario design and stress testingMacro-financial scenario design · System-wide exercises · Reverse stress testsSteward · Systemic Risk ManagementApplied here
- 05EconometricsEarly warning indicators · Quantile regression for growth-at-risk · Spillover estimationSteward · Economic DevelopmentApplied here
The STEM methods Financial Stability applies, and why.
- Financial economics of systemic riskRole in Financial StabilityFinancial economics explains how institutions fund themselves, price risk and respond to incentives.
- Network science for financial contagionRole in Financial StabilityNetwork science represents the financial system as institutions linked by exposures, funding and shared infrastructure.
- Complex systems and financial crisesRole in Financial StabilityComplex systems science studies how interactions among many agents produce system behaviour that no single agent intends: tipping points, feedback loops and sudden regime shifts.
- Scenario analysis for financial stabilityRole in Financial StabilityScenario analysis and stress testing explore how institutions and the system would fare under severe but plausible conditions.
- Econometrics of financial stabilityRole in Financial StabilityEconometrics estimates relationships from data and tests whether they hold.
Each Financial Stability method is described once in the STEM Commons at GCRI and applied here to contagion, liquidity and real-economy feedback.
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Pages in STEM foundation of Financial Stability.
Financial economics and macro-finance at Financial Stability
MethodNetwork science and contagion for financial stability
MethodComplex systems and agent-based modelling for financial stability
MethodScenario design and stress testing for financial stability
MethodEconometrics for financial stability
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