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A CRITICAL REVIEW OF CONTAGION RISK IN BANKING
Author(s) -
Hasman Augusto
Publication year - 2013
Publication title -
journal of economic surveys
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.657
H-Index - 92
eISSN - 1467-6419
pISSN - 0950-0804
DOI - 10.1111/j.1467-6419.2012.00739.x
Subject(s) - financial contagion , transparency (behavior) , economics , interbank lending market , financial crisis , financial system , financial stability , contagion effect , macro , monetary economics , business , financial economics , market liquidity , macroeconomics , political science , programming language , computer science , law
The recent financial crisis has focused the attention of scholars and policymakers on how to improve financial stability through better macro‐prudential regulation and supervision. In this paper, we compare the existing theoretical and empirical literature on contagion through the banking system. It is argued that the structure of the interbank market, the size of banks, the linkages among them, the level of correlation of their investments and the transparency of the regulator are key factors in determining the possibility of contagion. We discuss the different findings and present avenues for future research.