Systemic Risk: The Dynamics of Modern Financial Systems

Hardcover | April 15, 2013

byPrasanna Gai

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This book opens new ground in the study of financial crises. It treats the financial system as a complex adaptive system and shows how lessons from network disciplines - such as ecology, epidemiology, and statistical mechanics - shed light on our understanding of financial stability. Usingtools from network theory and economics, it suggests that financial systems are robust-yet-fragile, with knife-edge properties that are greatly exacerbated by the hoarding of funds and the fire sale of assets by banks. The book studies the damaging network consequences of the failure of large inter-connected institutions, explains how key funding markets can seize up across the entire financial system, and shows how the pursuit of secured finance by banks in the wake of the global financial crisis can generatesystemic risks. The insights are then used to model banking systems calibrated to data to illustrate how financial sector regulators are beginning to quantify financial system stress.

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This book opens new ground in the study of financial crises. It treats the financial system as a complex adaptive system and shows how lessons from network disciplines - such as ecology, epidemiology, and statistical mechanics - shed light on our understanding of financial stability. Usingtools from network theory and economics, it sug...

Prasanna Gai is Professor of Macroeconomics at the University of Auckland. He was appointed as Special Adviser to the Governor of the Bank of Canada for 2010-2011 and as the Academic Fellow of the Reserve Bank of New Zealand in 2012. Prior to his current position at Auckland, Professor Gai was Professor of Economics at the Australian ...

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Hardcover|Dec 15 2004

$145.51 online$189.00list price(save 23%)
Format:HardcoverDimensions:200 pages, 9.21 × 6.14 × 0.1 inPublished:April 15, 2013Publisher:Oxford University PressLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:0199544492

ISBN - 13:9780199544493

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Table of Contents

Hyun Song Shin: ForewordPreface1. Introduction2. The Robust-yet-fragile nature of Financial Systems3. Systemic Liquidity Crises4. Dynamic Credit Relationships5. Covered Bonds and Systemic Risk6. Quantifying Systemic Risk7. Financial System Resilience8. Conclusion