2012/08/02 by Stefano Battiston, Michelangelo Puliga, Rahul Kaushik +2 · 8 citations
Economics, Econometrics and Finance · #Complex Systems and Time Series Analysis #Economic and Technological Innovation #Banking stability, regulation, efficiency
paper · pdf · doi:10.1038/srep00541
openalex publication_date 2012/08/02 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
Systemic risk, here meant as the risk of default of a large portion of the financial system, depends on the network of financial exposures among institutions. However, there is no widely accepted methodology to determine the systemically important nodes in a network. To fill this gap, we introduce, DebtRank, a novel measure of systemic impact inspired by feedback-centrality. As an application, we analyse a new and unique dataset on the USD 1.2 trillion FED emergency loans program to global financial institutions during 2008-2010. We find that a group of 22 institutions, which received most of the funds, form a strongly connected graph where each of the nodes becomes systemically important at the peak of the crisis. Moreover, a systemic default could have been triggered even by small dispersed shocks. The results suggest that the debate on too-big-to-fail institutions should include the even more serious issue of too-central-to-fail.