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SUMMARY:Asset correlation and network fragility: How should we intervene? 
 - Kobayashi\, T (University of Kobe)
DTSTART:20140903T100000Z
DTEND:20140903T110000Z
UID:TALK54088@talks.cam.ac.uk
CONTACT:Kathryn de Ridder
DESCRIPTION:The question of how to stabilize financial systems has attract
 ed considerable attention since the global financial crisis of 2007–2009
 . Recently\, Beale et al. (2011) demonstrated that higher portfolio divers
 ity among banks would reduce systemic risk by decreasing the risk of simul
 taneous defaults at the expense of a higher likelihood of individual defau
 lts. In practice\, however\, a bank default has an externality in that it 
 undermines other banks’ balance sheets. In this presentation\, I focus o
 n the interplay between the interbank network and asset correlation struct
 ure. I argue that regulator’s intervention should be designed in a way t
 hat takes into account the mesoscopic features of financial markets. 
LOCATION:Seminar Room 2\, Newton Institute Gatehouse
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