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Reputational Dynamics in Financial Networks During a Crisis

Author

Listed:
  • Simpson Zhang

    (Office of Financial Research)

  • Mihaela van der Schaar

    (Oxford-Man Institute of Quantitative Finance, University of Oxford)

Abstract

This paper studies the role of learning and reputation in economic networks, such as interbank lending and derivatives trading networks, in times of market distress or financial crisis. The model demonstrates the importance of maintaining firm anonymity and identifies network structures that offer increased resilience.

Suggested Citation

  • Simpson Zhang & Mihaela van der Schaar, 2018. "Reputational Dynamics in Financial Networks During a Crisis," Working Papers 18-03, Office of Financial Research, US Department of the Treasury.
    • Handle: RePEc:ofr:wpaper:18-03
    as

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    File URL: https://www.financialresearch.gov/working-papers/files/OFRwp-18-03_Reputational-Dynamics-in-Financial-Networks.pdf
    File Function: First version, 2018
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    References listed on IDEAS

    as
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    10. Babus, Ana & Hu, Tai-Wei, 2017. "Endogenous intermediation in over-the-counter markets," Journal of Financial Economics, Elsevier, vol. 125(1), pages 200-215.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Network Dynamics; Network Design; Reputational Learning; Social Welfare;
    All these keywords.

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