This website uses its own and third-party cookies. Some of these cookies are used to develop analytical statistics of visits to the webpage, others to manage advertising or even others are necessary for the correct management of the site. If you continue to browse or click in accept we consider you accept the conditions for their use. You can get more information, or learn how to change the settings in our cookies policy?
Versión Española Versión Mexicana Ibercampus English Version Version française Versione italiana

24/1/2020  
    Ibercampus  | Editorial Board | Who we are | Ideology | Contact | Advertising rates | Subscription | RSS RSS
Policies
Inclusion policies
R&D
Employment
Economics
Culture
Green strategies
Health
Society and consumer
Sports
Debates
Interviews
Education
Grants & internships
Training
Trends
Enterprises & CSR
 Enterprises & CSR
ACNUR
AEGON
AIR LIQUIDE
ALCATEL-LUCENT
ALLIANZ
ARCELORMITTAL
ASIFIN
ASSICURAZIONI GENERALI
AXA
BANCO SANTANDER
BASF
BAYER
BBVA
BNP PARIBAS
CARREFOUR
DAIMLER AG
DEUTSCHE BANK
DEUTSCHE BÖRSE
DEUTSCHE TELEKOM
E.ON
ENEL
ENI
FORTIS
FRANCE TÉLÉCOM
GROUPE DANONE
IBERDROLA
INDITEX
ING GROUP
INTESA SANPAOLO
L'ORÉAL
LVMH
MUNICH RE
NOKIA
PHILIPS
RENAULT
REPSOL YPF
RWE
SAINT GOBAIN
SANOFI-AVENTIS
SAP AG
SCHNEIDER ELECTRIC
SIEMENS AG
SOCIÉTÉ GÉNÉRALE
SUEZ
TELECOM ITALIA
TELEFÓNICA
TOTAL S.A.
UNICREDIT
UNILEVER
VINCI
VIVENDI
VOLKSWAGEN

R&D
Debts and Financial Criss

A new mechanism to explain how a financial crisis happens


Researchers at the Graduate School of Economics, Kobe University and at Columbia University have proposed a new model to predict a financial crisis (a chain of bankruptcies) using a multiplex network model in which debts with different priorities are mutually held by banks. Their results were published in the "Highlight (Synopsis)" section of the online edition of Physics, a journal of the American Physical Society.
Ibercampus 22/7/2015 Send to a friend
Comparte esta noticia en TwitterFacebookTwitterdel.icio.usYahooRSS
Although much research has been conducted on the risk of financial markets since the bankruptcy of Lehman Brothers in 2008, which started the recent financial distress, most have adopted the "information-cascade model", a simple model of information transmission through a network. However, a risk transmission model via more complicated structures is necessary because a real financial market has a multitude of overlapping transactions.

When a financial institution goes bankrupt, creditors with high-priority bonds (called senior bonds) can be fully repaid from the institution´s remaining assets, while lower-priority creditors (those with junior bonds) cannot. In the traditional financial crisis model, it has been unclear how the difference in non-repayment risk due to debt priorities affects systemic risk.

Dr. Kobayashi and his team used a "multiplex network" to express the differences in the priority of debt repayments. For example, they described the transaction relations of junior bonds in one layer of a network and those of senior bonds in the second layer. By generalizing the standard cascade model to an arbitrary number of layers, his team clarified the effect caused by the difference in non-repayment risk of debts of different priorities. In addition, they derived a condition for which debt structures of the entire market will cause a financial crisis, and verified the accuracy of the condition by numerical simulations. Consequently, they confirmed that a necessary condition for minimizing systemic risk is that at least 50% of debts in the entire market should exist as senior debts.

Currently the Basel Committee founded in the BIS (Bank for International Settlements) leads the global financial regulation and each country establishes its own rules based on it. However, the existing financial restrictions do not take into consideration that systemic risk varies largely according to the priority of debts mutually held by various financial institutions. Based on this research result, Dr. Kobayashi stresses that new regulations should be reexamined from the viewpoint of debt structures.

Other issues R&D
China, Germany, Japan, Korea and the United States dominate global innovation - WIPO report 2019
New methodology developed to monitor patients with glioblastoma
Scientists find a place on Earth where there is no life
The embryonic origin of the Cyclops eye
Graphene activates immune cells helping bone regeneration in mice
Jurassic dinosaurs could have been dispersed between Africa and Europe 145 years ago
China´s Chang´e-4 probe lands on the moon
Artificial intelligence for studying the ancient human populations of Patagonia.
Chinese and European scientists propose 28 complementary colours
EU-wide rules for safety of drones approved by European Parliament

Subscribe free to our newsletter
Vanity Fea
The Virtual World We Inhabit
José Ángel García Landa
We can all be leaders
VIDEOCOMMUTING A NEW ORGANIZATIONAL REALITY THAT POSITIVELY IMPACTS EMPLOYEES
Mar Souto Romero
Financial inclusion
Financial Education For All!
Carlos Trias
Brusselian Lights
European elections (I): which words are more used in the European political manifestos?
Raúl Muriel Carrasco
Humor and Political Communication
Comisión de Arbitraje, Quejas y Deontología (Spain) (3) You can´t be too careful
Felicísimo Valbuena
Want your own blog? Want to be read by universities?
Find out here
Books
"Tthe study of human behaviour was political from the beginning"
The EU "An Obituary"
Startup Cities "Why Only a Few Cities Dominate the Global Startup Scene"
Blockchain Revolution "How the Technology Behind Bitcoin and Cryptocurrency Is Changing the World "
Doughnut Economics "Seven Ways to Think Like a 21st-Century Economist "
The People vs Tech "How the Internet Is Killing Democracy"
Theses and dissertations
1 What are we waiting to boost, link financial / digital education and improve information?
Legal Advise | Privacy Policy | Editorial Board | Who we are | Ideology | Contact | Advertising rates | RSS RSS