Speaker：Su Yinan (Assistant Professor, Carey Business School, Johns Hopkins University ）
Description：I study how interbanklending network structures affect financial fragility. Interbank lending isbeneficial but subject to coordination failure. With interbank wholesalefunding, banks’ balance sheets become inflated, and give the senior retaildepositors a sense of safety to allow more illiquid assets. In interbank runs,banks run on banks as they mutually reinforce each other to withdraw interbanklending. Banks’ individually precautionary liquidity hoarding strategies areconnected by the pair wise lending relationships. Mean-field analysis extractsthe systemic behavior from the network of strategic interactions. I show suchdispersed and indirectly linked interactions also lead to discontinuous andsystem-wide liquidity crunches, as if the interactions are centralized. Localinsolvency shocks trigger the interbank run if the network is unraveled beyonda critical point. The model is applied to identify the optimal capitalinjection targets of government bailouts, and study the systemic effects of theproposed regulations on restraining the highly connected banks.
Time：July 26, 2019 (Friday)，14：00-15：30
Venue：Shahe Main Teaching Building, room 207
