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The total system risks effect of the macro-network structure change based on the Leontief inverse in China

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  • Jiangyu Li
  • Yu Wang
  • Xinrong Xiao

Abstract

We use the macro-network contagion model to investigate how changes in intersectoral liabilities among non-financial corporations, banks, government, households, and foreign sectors influence systemic risk in China. We conduct simulations on the banks sector’s liability ratio changes, which can serve for policy evaluation. The structural change importance index reflects the banks’ system importance. When compared to four developed countries, banks risk in China is significantly lower. Households sector also warrants close scrutiny. The multilayer network reveals a significant dependency on the debt layer of the banks, non-financial corporations and households. Our findings provide fresh perspectives on using macro-network for systemic risk management.

Suggested Citation

  • Jiangyu Li & Yu Wang & Xinrong Xiao, 2025. "The total system risks effect of the macro-network structure change based on the Leontief inverse in China," Applied Economics Letters, Taylor & Francis Journals, vol. 32(15), pages 2138-2144, September.
    • Handle: RePEc:taf:apeclt:v:32:y:2025:i:15:p:2138-2144
    DOI: 10.1080/13504851.2024.2332548
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