Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/215659 
Year of Publication: 
2020
Series/Report no.: 
CEAMeS Discussion Paper No. 17/2020
Publisher: 
University of Hagen, Center for East Asia Macro-economic Studies (CEAMeS), Hagen
Abstract: 
The topography of China's financial network is unique. Is it also uniquely robust to contagion? We explore this question using network theory. We find that networks that are more concentrated are less fragile when connectivity is low. However, they remain in a robust-yet-fragile state longer than decentralized networks, when connectivity is increased. We implement Chinese characteristics into our model and simulate it numerically. The simulations show, that the large state-controlled banks act as effective stop-gaps for contagion, which makes the Chinese network relatively robust. This robustness is significantly reduced, if a significant share of the smaller banks are high-risk institutions.
Document Type: 
Working Paper

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