The formation of financial networks
研究了银行在面临传染风险时能否事先承诺相互保险，内生形成的金融网络如何影响系统性风险概率，并展示了不存在传染的均衡状态。
Modern banking systems are highly interconnected. Despite various benefits, linkages between banks carry the risk of contagion. In this article, I investigate whether banks can commit ex ante to mutually insure each other, when there is contagion risk in the financial system. I model banks' decisions to share this risk through bilateral agreements. A financial network that allows losses to be shared among various counterparties arises endogenously. I characterize the probability of systemic risk, defined as the event that contagion occurs conditional on one bank failing, in equilibrium interbank networks. I show that there exist equilibria in which contagion does not occur.