City Research Online

Abstract

We apply a novel technique to identify systemically important regions (SIRs) in a global network that shows a reduced degree of concentration and the development of a multi-centered structure. We observe that when a region is more connected to other regions, it is exposed to a higher level of systemic risk. This condition holds even more strongly for non-systemically important regions. However, for SIRs, interconnectedness is not significantly associated with systemic risk. Our empirical evidence suggests that an increase in interconnectedness at the regional level, together with a decrease in interconnectedness for a single pivotal center, may reduce the aggregate systemic risk at the global level.

Publication Type:	Article
Additional Information:	© Elsevier 2019. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
Publisher Keywords:	Interconnectedness, Systemically important regions, Systemic risk, Networks
Subjects:	H Social Sciences > HG Finance J Political Science > JZ International relations
Departments:	Bayes Business School > Actuarial Science & Insurance

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