Skip to main content

Interconnectedness and financial stability


The full text article is not available for purchase.

The publisher only permits individual articles to be downloaded by subscribers.

The 2007–2008 global financial crisis has been associated with a high level of connectivity in the global financial system. The crisis, and the following events of the past decade, have highlighted the relevance of the concept of interconnectedness to understanding systemic risk, transmission of financial contagion and ultimately on the subject of financial stability. Nevertheless, the more general relationship, across its full spectrum, between interconnectedness and financial stability, is still not fully studied and understood. This paper reviews the positive aspects as well as the negative aspects of interconnectedness. It also discusses briefly the important question of the optimal level of connectivity in a financial system. Finally, the paper proposes the use of novel statistical inferential methods for complex networks to address comprehensively the study of interconnectedness in financial systems.

Keywords: financial stability; interconnectedness; statistical network models

Document Type: Research Article

Publication date: January 1, 2019

More about this publication?
  • Journal of Risk Management in Financial Institutions is the essential professional and research journal for all those involved in the management of risk at retail and investment banks, investment managers, broker-dealers, hedge funds, exchanges, central banks, financial regulators and depositories, as well as service providers, advisers, researchers and academics. Guided by expert Editors and an eminent Editorial Board, each quarterly 100-page issue does not publish advertising but rather in-depth articles, reviews and applied research by leading professionals and researchers in the field on six key inter-related areas: strategic and business risk, financial risk, including traditional/exotic credit, market and liquidity risks, operational risk, regulatory and legal risks, systemic risk, and sovereign risk.

  • Editorial Board
  • Information for Authors
  • Subscribe to this Title
  • Contact us
  • Forthcoming content
  • Multi-user licences
  • Ingenta Connect is not responsible for the content or availability of external websites
  • Access Key
  • Free content
  • Partial Free content
  • New content
  • Open access content
  • Partial Open access content
  • Subscribed content
  • Partial Subscribed content
  • Free trial content