Bank capital shock propagation via syndicated interconnectedness
Nirei, Makoto : Julián Caballero : Vladyslav Sushko
BIS Working Papers No 484 Bank for International Settlements (2015/01/27)
Loan syndication increases bank interconnectedness through co-lending relationships. We study the financial stability implications of such dependency on syndicate partners in the presence of shocks to banks' capital. Model simulations in a network setting show that such shocks can produce rare events in this market when banks have shar…