IDEAS home Printed from https://ideas.repec.org/a/bfr/fisrev/20101418.html
   My bibliography  Save this article

What do network theory and endogenous risk theory have to say about the effects of central counterparties on systemic stability?

Author

Listed:
  • Zigrand, JP.

Abstract

Central counterparties (CCPs) alter the connectivity structure of financial institutions (FIs), and therefore the transmission of shocks. What does network theory have to say about the effects of CCPs on systemic stability, and how do different CCP structures (e.g. one vs multiple CCPs) alter systemic risk from a solvability point of view? CCPs not only alter the direct interconnection of FIs through their balance sheets, they also affect FIs and the links between them indirectly through prices. Prices are endogenous and are not only determined by the actions of the FIs, but they in turn constitute imperatives for FIs to act through marking-to-market and risk-sensitive constraints, both natural ingredients of CCPs. Could such feedback effects from CCPs amplify market movements and financial stress?

Suggested Citation

  • Zigrand, JP., 2010. "What do network theory and endogenous risk theory have to say about the effects of central counterparties on systemic stability?," Financial Stability Review, Banque de France, issue 14, pages 153-160, July.
    • Handle: RePEc:bfr:fisrev:2010:14:18
    as

    Download full text from publisher

    File URL: https://publications.banque-france.fr/sites/default/files/medias/documents/financial-stability-review-14_2010-07.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Paddrick, Mark & Young, H. Peyton, 2021. "How safe are central counterparties in credit default swap markets?," LSE Research Online Documents on Economics 101170, London School of Economics and Political Science, LSE Library.
    2. Andre R. Neveu, 2018. "A survey of network-based analysis and systemic risk measurement," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 13(2), pages 241-281, July.
    3. H Peyton Young & Mark Paddrik, 2019. "How Safe are Central Counterparties in Credit Default Swap Markets?," Economics Series Working Papers 885, University of Oxford, Department of Economics.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bfr:fisrev:2010:14:18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael brassart (email available below). General contact details of provider: https://edirc.repec.org/data/bdfgvfr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.