| Data: |
2016 |
| Resum: |
We investigate the properties of financial networks that allow to optimally solve the trade-off between higher risk-sharing and contagion. With continuous shock distributions, the optimum features the segmentation of the system of firms into disjoint components, with uniform exposure within them. With positive mass on some large shocks, it is instead optimal to modulate the exposure level to different firms. When firms are heterogeneous in the risk characteristics of their shocks, optimality requires homogeneous components, while with heterogeneity in size, an irrelevance result holds. Also, the incentives of firms to establish linkages may not be aligned with social optimality. |
| Resum: |
The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396. |
| Ajuts: |
European Commission 649396
|
| Drets: |
Aquest document està subjecte a una llicència d'ús Creative Commons. Es permet la reproducció total o parcial, la distribució, la comunicació pública de l'obra i la creació d'obres derivades, fins i tot amb finalitats comercials, sempre i quan es reconegui l'autoria de l'obra original.  |
| Llengua: |
Anglès |
| Col·lecció: |
Barcelona Graduate School of Economics. ADEMU working paper series |
| Col·lecció: |
ADEMU Working Paper Series ; 29 |
| Document: |
Working paper |
| Matèria: |
Firm networks ;
Contagion ;
Risk sharing |
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