When Convergence Breeds Fragility: Evidence from Global Equity–Bond–Trade Networks

The robustness of international financial and trade networks depends not only on the strength of individual links but also on the way those links interact across layers. Motivated by evidence that Asian economies are increasingly integrated through both equity and bond markets yet remain tightly linked to the United States, this study applies the Master Stability Function (MSF) to a two-layer finance–trade network for 2015–2022. We compare an Asia-8 configuration without the United States (no-U.S.) with the configuration that includes the United States (with-U.S.) and examine how within-layer coupling (γ) and cross-layer coupling (σ) affect stability. Annual MSF maps reveal that adding the United States modestly reduces the size of the stable region of parameter space; however, this gap narrows over time as Asian nodes (especially China) align more closely with the U.S. side of the network. Decomposition by direction, concentration and strength of links shows that local reinforcement of intra-layer coupling can increase stability in both layers, but the benefits are heterogeneous across countries and assets. Overall, the findings suggest that convergence of Asia–U.S. linkages breeds fragility only temporarily and that carefully designed strengthening of local connections can mitigate potential instability.