Illiquidity and Insolvency: A Double Cascade Model of Financial Crises
Illiquidity and Insolvency: A Double Cascade Model of Financial Crises
The scope of financial systemic risk research encompasses a wide range of channels and effects, including asset correlation shocks, default contagion, illiquidity contagion, and asset firesales. For example, insolvency of a given bank will create a shock to the asset side of the balance sheet of each of its creditor …