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The bankruptcy problem in financial networks

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  • Stutzer, Michael

Abstract

The bankruptcy problem of resolving a single debt owed to multiple creditors is extended to financial networks, where there are multiple debtors and creditors.

Suggested Citation

  • Stutzer, Michael, 2018. "The bankruptcy problem in financial networks," Economics Letters, Elsevier, vol. 170(C), pages 31-34.
    • Handle: RePEc:eee:ecolet:v:170:y:2018:i:c:p:31-34
    DOI: 10.1016/j.econlet.2018.05.034
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    References listed on IDEAS

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    1. Dagan, Nir & Volij, Oscar, 1993. "The bankruptcy problem: a cooperative bargaining approach," Mathematical Social Sciences, Elsevier, vol. 26(3), pages 287-297, November.
    2. Gabrielle Demange, 2018. "Contagion in Financial Networks: A Threat Index," Management Science, INFORMS, vol. 64(2), pages 955-970, February.
    3. Abdelghani A. Elimam & Maurice Girgis & Samir Kotob, 1996. "The Use of Linear Programming in Disentangling the Bankruptcies of Al-Manakh Stock Market Crash," Operations Research, INFORMS, vol. 44(5), pages 665-676, October.
    4. Larry Eisenberg & Thomas H. Noe, 2001. "Systemic Risk in Financial Systems," Management Science, INFORMS, vol. 47(2), pages 236-249, February.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Nicolas Houy & Frédéric Jouneau & François Le Grand, 2020. "Defaulting firms and systemic risks in financial networks: a normative approach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(2), pages 503-526, September.
    2. Pedro Calleja & Francesc Llerena, 2023. "Proportional clearing mechanisms in financial systems: an axiomatic approach," UB School of Economics Working Papers 2023/442, University of Barcelona School of Economics.
    3. Gabrielle Demange, 2021. "On the resolution of cross-liabilities," Working Papers halshs-03151128, HAL.
    4. Gabrielle Demange, 2020. "Resolution rules in a system of financially linked firms," Working Papers hal-02502413, HAL.
    5. Calleja, Pedro & Llerena, Francesc, 2024. "Proportional clearing mechanisms in financial systems: An axiomatic approach," Journal of Mathematical Economics, Elsevier, vol. 111(C).

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    More about this item

    Keywords

    Financial networks; Contagion; Default resolution; Nash Bargaining;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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