ECB paper analyses indirect channels of interbank contagion
Eurozone’s interbank market vulnerable to sovereign debt and non-bank sector shocks, research finds
The eurozone’s interbank market is vulnerable to contagion along indirect channels, a working paper published by the European Central Bank finds.
In Financial contagion within the interbank network, Christina Mikropoulou and Angelos Vouldis argue most analysis of this topic has examined direct linkages. By contrast, they present “a model of financial contagion in the interbank market featuring both direct and indirect transmission mechanisms”.
The authors examine how shocks from outside sectors
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