A new mechanism to explain how a financial crisis happens

Dr. Kobayashi Teruyoshi, an associate professor at the Graduate School of Economics, Kobe University and Dr. Charles Brummitt of Columbia University have proposed a new model to predict a financial crisis (a chain of bankruptcies) using a multiplex network model in which debts with different priorities are mutually held by banks. Their results were published on June 24 in the "Highlight (Synopsis)" section of the online edition of Physics, a journal of the American Physical Society.

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