Financial contagion function of reputation rather than size of banks
Reputation, bank clustering and large in-coming interbank loans are better explanatory variables for financial contagion than a bank's size or leverage, according to a Bank of Finland discussion paper.
Contagion in the Interbank Network: An Epidemiological Approach, by Mervi Toivanen, analyses the importance of individual bank-specific factors on financial stability using a novel method to model the spreading of the contagion in the interbank network by implementing an epidemiological model.
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