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A SEIQRS Model for Interbank Financial Risk Contagion and Rescue Strategies in Complex Networks

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  • Bo Sun

    (School of Statistics and Mathematics, Central University of Finance and Economics, Beijing 100081, China)

  • Yujia Liu

    (School of Finance, Central University of Finance and Economics, Beijing 100081, China)

Abstract

Our paper employs complex network theory and the SEIQRS epidemic model based on the dynamics of differential equations to investigate the contagion mechanisms of financial risk within banking systems and to evaluate rescue strategies. A scale-free interbank network of 36 listed Chinese banks is constructed using the minimum-density method. Under the SEIQRS epidemic model, we simulate risk propagation pathways and analyze how key parameters affect systemic risk. Simulation of various rescue interventions demonstrates that, building on the existing support framework, coordinated adjustment of the quarantine rate, exposed-to-infectious transition rate, and quarantine-recovery rate can substantially curb the spread of risk. Among the strategies tested, the high-degree-first rescue strategy yields the best outcomes but requires precise timing, specifically, implementation at the first non-worsening time point. Finally, we offer some policy recommendations, which provide theoretical support and practical enlightenment for preventing cross-system financial risk contagion.

Suggested Citation

  • Bo Sun & Yujia Liu, 2025. "A SEIQRS Model for Interbank Financial Risk Contagion and Rescue Strategies in Complex Networks," Mathematics, MDPI, vol. 13(19), pages 1-16, September.
  • Handle: RePEc:gam:jmathe:v:13:y:2025:i:19:p:3059-:d:1756085
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