Stability and Complexity in Model Banking Systems
Complexity and Systemic Risk: Hilary Term Seminar Series 2010
00:00
The Phase Transition of a Banking System
A bank is a node in a network of interconnected banks. The nodes at a minimal level of complexity have two kinds of money. They're connected to other banks, not only from borrowing from them, but also they're connected to an external world through their external assets. And indeed, one can then elaborate this caricature cartoon and say, the bank fails if this shock exceeds the net worth. As you approach the phase transition, there are warning signs, but that's what I'm not going to talk about.
Transcript
Play full episode
