- Series Information
- The Oxford Handbook of the Economics of Networks
- List of Contributors
- Introduction to the Handbook
- Networks: A Paradigm Shift for Economics?
- Networks in Economics: A Perspective on the Literature
- The Past and Future of Network Analysis in Economics
- Games Played on Networks
- Repeated Games and Networks
- Stochastic Network Formation and Homophily
- Network Formation Games
- Links and Actions in Interplay
- Conflict and Networks
- Key Players
- Some Challenges in the Empirics of the Effects of Networks
- Econometrics of Network Formation
- Small-World Networks
- Networked Experiments
- Field Experiments, Social Networks, and Development
- Networks in the Laboratory
- Diffusion in Networks
- Learning in Social Networks
- Financial Contagion in Networks
- Networks, Shocks, and Systemic Risk
- Informal Transfers in Social Networks
- Community Networks and Migration
- Social Networks and the Labor Market
- Attention in Organizations
- Models of Bilateral Trade in Networks
- Strategic Models of Intermediation Networks
- Networks in International Trade
- Targeting and Pricing in Social Networks
- Managing Social Interactions
- Economic Features of the Internet and Network Neutrality
- Index
Abstract and Keywords
This chapter provides an introduction to the literature on financial contagion in networks. We aim to do this by focusing on a limited number of papers in some formal detail, trying to illustrate their analogies and differences as much as possible within a common framework. In the first part, the chapter considers contagion via transmission of shocks, such as abrupt drops in the flow of revenue to one firm, which affect other firms connected to it through financial linkages. The chapter then discusses informational contagion, understood as the process whereby a shock to one market is transmitted to other markets via the information revealed in the first market.
Keywords: financial contagion, shock transmission in networks, informational contagion, network fragility
Antonio Cabrales, Professor, Department of Economics, University College London
Douglas Gale, Professor of Economics and Director of Research in the Brevan Howard Centre for Financial Research, Imperial College London
Piero Gottardi, Professor of Economics, European University Institute Piero Gottardi, Professor of Economics, European University Institute
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- Series Information
- The Oxford Handbook of the Economics of Networks
- List of Contributors
- Introduction to the Handbook
- Networks: A Paradigm Shift for Economics?
- Networks in Economics: A Perspective on the Literature
- The Past and Future of Network Analysis in Economics
- Games Played on Networks
- Repeated Games and Networks
- Stochastic Network Formation and Homophily
- Network Formation Games
- Links and Actions in Interplay
- Conflict and Networks
- Key Players
- Some Challenges in the Empirics of the Effects of Networks
- Econometrics of Network Formation
- Small-World Networks
- Networked Experiments
- Field Experiments, Social Networks, and Development
- Networks in the Laboratory
- Diffusion in Networks
- Learning in Social Networks
- Financial Contagion in Networks
- Networks, Shocks, and Systemic Risk
- Informal Transfers in Social Networks
- Community Networks and Migration
- Social Networks and the Labor Market
- Attention in Organizations
- Models of Bilateral Trade in Networks
- Strategic Models of Intermediation Networks
- Networks in International Trade
- Targeting and Pricing in Social Networks
- Managing Social Interactions
- Economic Features of the Internet and Network Neutrality
- Index
