Babus, Ana - Tinbergen Instituut - 2006
carry the risk of contagion. In this paper we investigate how banks decide on direct balance sheet linkages and the … implications for contagion risk. In particular, we model a network formation process in the banking system. The trade-off between … networks that are resilient to contagion. Thus, in an equilibrium network, the probability of contagion is virtually 0. …