Acemoglu, Daron; Ozdaglar, Asuman; Tahbaz-Salehi, Alireza - In: American Economic Review 105 (2015) 2, pp. 564-608
This paper argues that the extent of financial contagion exhibits a form of phase transition: as long as the magnitude of negative shocks affecting financial institutions are sufficiently small, a more densely connected financial network (corresponding to a more diversified pattern of interbank...