How do insiders respond to regulatory oversight? History suggests that they form sophisticated networks to share information and circumvent regulation. We develop a theory of the formation and regulation of information transmission networks. We show that agents with sufficiently complex networks...

I develop a model to study two related questions: how bank decisions to form connections depend on fundamentals; and how financial stability depends on bank network structure. In my model, banks are connected through two layers of networks: interbank debts and banks' common investments in...

We propose a parsimonious model of over-the-counter trading with asymmetric information to rationalize the existence of intermediation chains that stand between buyers and sellers of assets. Trading an asset through several heterogeneously informed intermediaries can preserve the efficiency of...

I develop a model of contagion that stems from endogenous risk-sharing when financial firms differ in distress levels. Firms face costly liquidation and strategically trade assets, thereby forming links. A link with a distressed firm can be socially costly as it raises system-wide liquidation...

How do insiders respond to regulatory oversight on transmissions? History suggests that they form more sophisticated networks to circumvent regulation. We develop a theory of the formation and regulation of transmission networks. We show that agents with sufficiently complex networks bypass any...

This study investigates whether and how central clearing influences the overall liquidity needs in a network of financial obligations. Utilizing the approach of flow network theory, we show that the effect of adding a central clearing counterparty (CCP) is decomposed into two effects: central...

In this paper we review recent advances in financial economics in relation to the measurement of systemic risk. We start by reviewing studies that apply traditional measures of risk to financial institutions. However, the main focus of the review is on studies that use network analysis paying...

Evidence from the main Colombian payment and settlement systems verifies that local financial networks have self-organized into a modular (i.e. clustered) scale-free (i.e. inhomogeneous) architecture that favors everyday robustness and performance in exchange for rare episodes of fragility but...

We study the network of Colombian sovereign securities settlements. With data from the settlement market infrastructure we study financial institutions' transactions from three different trading and registering individual networks that we combine into a multi-layer network. Examining this...

An interacting network coupling financial institutions' multiplex (i.e. multi-layer) and financial market infrastructures' single-layer networks gives an accurate picture of a financial system's true connective architecture. We examine and compare the main properties of Colombian multiplex and...