We provide a framework to study the formation of financial networks and investigate the interplay between banks' lending incentives and the emergence of systemic risk. We show that under natural contracting assumptions, banks fail to internalize the implications of their lending decisions for...

A novel approach of gravity strength centrality (GSC) model is proposed to identify the influential risk spreaders in Chinese financial networks. We also measure the systemic risk contribution of financial institutions via ∆CoVaR and detect the relationship between the risk spreading ability...