Closer ties between banks could mean more risk-taking
Model points to risks of core-periphery structure
A more integrated financial system may encourage risky investment decisions – particularly if the network is not symmetrical, a conference at the London School of Economics and Political Science (LSE) heard on December 9.
Speaking at the LSE's Systemic Risk Centre, Cambridge University economist Sanjeev Goyal described his recent research with Andrea Galeotti and Christian Ghiglino from the University of Essex which used a simplified model to highlight the effect of the principal-agent problem
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