We consider a stylized core-periphery financial network in which links lead to the creation of projects in the outside economy but make banks prone to contagion risk. The controller seeks to maximize, under budget constraints, the value of the financial system defined as the total amount of...

We propose a framework for testing the possibility of large cascades in financial networks. This framework accommodates a variety of specifications for the probabilities of emergence of 'contagious links', where a contagious link leads to the default of a bank following the default of its...

Since the onset of the financial crisis in 2007, more than 370 of the almost 8000 US banks insured by the Federal Deposit Insurance Corporation have failed. By comparison, between 2000 and 2004 there were around 30 failures and no failures occurred between 2005 and the beginning of 2007.We focus...

We study a financial network where forced liquidations of an illiquid asset have a negative impact on its price, thus reinforcing network contagion. We give conditions for uniqueness of the clearing asset price and liability payments. Our main result holds under mild and natural assumptions on...

We study optimal equity infusions into a financial system represented as a hierarchical network with two classes of banks, prone to both the risk of insolvencies and the risk of runs by short term creditors. The government seeks to minimize, under budget constraints, the magnitude of the total...

We introduce threshold growth in the classical threshold contagion model, or equivalently a network of Cramer-Lundberg processes in which nodes have downward jumps when there is a failure of a neighboring node. Choosing the configuration model as underlying graph, we prove fluid limits for the...

In financial derivatives networks clearinghouses have been mandated as de facto central nodes: they are buyers to the sellers of financial contracts and resellers to the ultimate buyers. Other services aim at solving various network problems such as reducing cycles. All these services face...