Fire sales turn a crash into a crisis, simulation shows

‘More realistic’ core-periphery model leads to wipeout of network if several nodal banks default

Fire sale

Fire sales of assets by stressed banks could be more important than the structure of banking networks in spreading a systemic crisis, a new simulation shows.

Asset price drops are not transmitted through the existing interbank financing network, but instead affect every bank simultaneously. As a result, the simulation finds they could cause the failure of up to 17 times as many banks as would be brought down by interbank defaults alone.

“More and more articles are arriving at this conclusion

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

Sorry, our subscription options are not loading right now

Please try again later. Get in touch with our customer services team if this issue persists.

New to View our subscription options


Want to know what’s included in our free membership? Click here

This address will be used to create your account

Most read articles loading...

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here