Quantcast
Channel: MoneyScience: 's news items
Viewing all articles
Browse latest Browse all 2361

A lending scheme for a system of interconnected banks with probabilistic constraints of failure. (arXiv:1903.06042v2 [q-fin.MF] UPDATED)

$
0
0

We derive a closed form solution for an optimal control problem related to an interbank lending schemes subject to terminal probability constraints on the failure of banks which are interconnected through a financial network. The derived solution applies to a real banks network by obtaining a general solution when the aforementioned probability constraints are assumed for all the banks. We also present a direct method to compute the systemic relevance parameter for each bank within the network.


Viewing all articles
Browse latest Browse all 2361

Trending Articles