Understanding Financial Contagion: A Complexity-Modeling Perspective
Abstract
This chapter reviews key contributions of complexity science to the study of systemic risk in financial systems. The focus is on network models of financial contagion, where I explore various mechanisms of shock propagation, such as counterparty default risk and overlapping portfolios. I highlight how the interconnectedness of financial institutions can amplify risk, and I discuss how standard risk management tools, which neglect these interactions, can increase systemic risk.
Fields of Study & Subjects
Complex Systems and Time Series Analysis
Banking stability
regulation
efficiency
Complex Network Analysis Techniques
Publication details
- Journal / source
- SFI Press eBooks
- Pages
- 506–547
- Publication date
- 11 February 2026
- Language
- EN
- Document type
- Book chapter