Effect Of Interbank Network Structure On Risk Contagion

With the global financial liberalization and globalization,the instability of the financial system is increasing,and the financial crisis is emerging.Especially in 2007,the US experienced the most serious financial crisissince the 1930s,which exposed the hidden risks in the banking system,and further proved the obvious role of the banking sector in financial crisis and the characteristics of the banking crisis contagion.As the core of the financial industry,banking industry plays a very important role in asset allocation.the stability of the banking industry is the foundation of the healthy development of the national economy and the prosperity and stability of the country.In order to solve the problem of liquidity,acomplexrelationshipoflendingandborrowingbetweenbankagentswillbeform edininterbankmarket.Interbank debt is an important way of contagion of bank default risk,interbank debt network structure has an important impact on risk contagion.Interbank debt network structure is a kind form of bank heterogeneity in the bank debt market.And the network structure has an important influence on risk contagion and systemic risk.So individual heterogeneity of interbank debt network has an important impact on risk contagion and systemic risk.Individual heterogeneity of interbank debt network is formed by the difference between banks in the banking system.Individual heterogeneity mainly includes heterogeneity of concentration degree,the heterogeneity of connection tendency and the heterogeneity of liquidity status.In the study of individual heterogeneity in the interbank debt networks,there are few studies on the risk contagion between the connection tendency and the mobility status heterogeneity.So this paper will focus on the impact of these two kinds of heterogeneity on the risk contagion.In this paper,we study the relationship between individual differences and risk contagion from the individual perspective.And,for differences in the network structure owing to the heterogeneity of connection tendency and the heterogeneity of liquidity status,and how these individual heterogeneity affect the risk contagion and systemic risk,these issues have not been adequately studied.Therefore,this paper mainly studies these two problems:first,the network structuredifference caused by the heterogeneity of connection tendency and the heterogeneity of liquidity status;second,how the network structuredifference casued by the two types of heterogeneity influences risk contagion and systemic risk.In view of these problems,this paper studies the network structuredifference from the two kinds of heterogeneity.firstly,Research shows that(1)the heterogeneity of connection tendency makes the network community.The larger the connection tendency,the more obvious the community characteristics of the network.(2)the heterogeneity of liquidity status lead to distribution difference of strength of out degree and in degree(interbank loans,interbank borrowing.In the real interbank market,this heterogeneity inflect the difference between the bank’s liquidity demand or supply.Secondly,we construct two kinds of networks with community characteristics.And by using the simulation experiment,we can know howitinfluences risk contagion and systemic risk.simulation results show that:(1)when the regional crisis occurs,on the one hand,it is easier to form the risk contagion in the region,on the other hand,the risk is difficult to spread outside the region.in the network with the heterogeneity of the connection tendency,banks tend to internal lending,resulting in contact between banks more closely within the region,and more limited across the region.(2)in the interbank network,it is more likely to cause contagion if the large banks that are in the position of liquidity demand go bankrupt.Therefore,in the definition of systemically important bank,the liquidity status should be an important measure.In the process of regulation,regulators should strengthen the supervision of large banks which demand liquidityin the interbank marketThis paper breakthrough research angle of the traditional interbank debt network and the risk contagion.Firstly,starting from the heterogeneity between the bank debt in the network bank,we studied the network structure differences of the interbank network.Secondly,the research platform is established to study the influence of heterogeneity of banks on risk contagion and systemic risk.