Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments July 10, 2013 erstellt
Beschreibung:
This paper provides a model of systemic panic among financial institutions with heterogeneous fragilities. Concerns about potential spillovers from each other generate strategic interaction among institutions, triggering a pre-emption game in which one tries to exit the market before others to avoid spillovers. Although financial contagion originates in weaker institutions, systemic risk critically depends on financial health of stronger in the contagion chain. Our analysis suggests that when concerns about spillovers prevail, (i) increasing heterogeneity of institutions promotes systemic stability, (ii) bolstering the strong institutions in the contagion chain, rather than the weak, more effectively enhances systemic stability