FINANCIAL STABILITY INDICES AND FINANCIAL NETWORKS DYNAMICS IN EUROPE

While many analyses focus on the simulation of different contagion scenarios in the event of a crisis, there is little work devoted to the topology of financial networks. We investigate a sample of 260 European banks. The networks observed am unique and more sophisticated than the theoretical networks typically used in contagion scenarios. We show there are topological particularities in the banking networks. We demonstrate that the location of a bank in its networks of relationships and the empirical properties observed in its neighborhood have an impact on the stability of the financial system. In addition, we show that these topologies of connections have been significantly transformed both during and after the financial crisis.