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Abstract

We consider a developed economy banking system, that, when surpass certain size, may destabilize and even enter in chaos. Taking Deposits D t, Reserves R t, Loans L t, the ratio of R t to D t and a parameter γ that weights endogenously the system memory, we analyse stability and the possibility of chaos. Using data for the U.S. between 1960 and 2012 we found that a maximum instability state is verified in 2008 when the crisis hits the U.S. banking system core carrying to a public bailout. A larger system does not necessarily lead to robustness but can expand to greater fragility. A proposed banking system stability indicator is also analysed.



Item Type: MPRA Paper -

Original Title: Size effect in transitional dynamics of the banking network-

English Title: Size effect in transitional dynamics of the banking network-

Language: English-

Keywords: Banking System, Financial Crises, Instability, Systemic Risk-

Subjects: G - Financial Economics > G0 - General > G01 - Financial Crises-





Author: Garcia, Alfredo Daniel

Source: https://mpra.ub.uni-muenchen.de/80195/







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