Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212259 
Authors: 
Year of Publication: 
2013
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 19/2013
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This paper analyses the importance of individual bank-specific factors on financial stability. First, we use a novel method to model the spreading of the contagion in the interbank network by implementing an epidemiologic model. Actual data on European banks is exploited with simulated scale-free networks. The average contagion affected 70% and 40% of European banks' total assets in 2007 and in 2010, respectively. Country-level results suggest that French, British, German and Spanish banks are the most contagious ones, whereas banks from Ireland, Greece and Portugal induce only limited negative effects. Secondly, cross-sectional panel estimations are performed to disentangle the leading indicators influencing the level of contagion. Bank clustering, large in-coming interbank loans and bank reputation are more prominent explanatory variables than the size or leverage. Finally, central banks' interventions reduce contagion only slightly.
Subjects: 
contagion
banks
Europe
interbank
epidemiology
panel regression
JEL: 
G01
G21
C15
Persistent Identifier of the first edition: 
ISBN: 
978-952-6699-35-6
Document Type: 
Working Paper

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