The traditional approach to the stress testing of financial institutions focuses on capital adequacy and solvency. Liquidity stress tests are often applied in parallel to solvency stress tests, based on scenarios which may not be consistent with those used in solvency stress tests. We propose a...

A crucial ingredient in social interaction models is the structure of peer groups with which individuals interact. We argue that this structure can vary from one individual to another and thus should be modeled as randomly distributed across individuals. We propose and study a dynamic binary...