Government plays a necessary role in keeping markets working efficiently and fairly. Market failures – situations in which the invisible hand does not make everyone better off – are among the oldest and most universally accepted justifications for regulation. However, incidents of market...

Banks usually hold large amounts of domestic public debt which makes them vulnerable to their own sovereign's default risk. At the same time, governments often resort to costly public bailouts when their domestic banking sector is in trouble. We investigate how the interbank network structure...