Systemic Risks in Financial Networks Under Strategic Attacks

I study the systemic risks in financial networks under strategic attacks based on the framework of Elliott, Golub, and Jackson (2014). I obtain different results: Strategic attacks cause much larger cascades than random shocks do, and I identify the situations when financial networks are stable under random attacks but still fragile under strategic attacks. Also, the non-monotonic relationship between systemic risk and diversification level may not hold under strategic attacks. In addition, I generalize the case of one shock to multiple shocks. My work is relevant to the evaluation and prevention of the systemic risks in financial networks