{
  "title": "Bank Network Analysis in the ECCU",
  "publication": "IMF Working Papers, July 12, 2018",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2018/07/12/bank-network-analysis-in-the-eccu-46066",
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  "summary": "This paper applies network analysis to assess the extent of systemic vulnerabilities in the ECCU banking system. It includes two sets of illustrative stress tests.",
  "sections": [
    {
      "heading": "Objective and scope",
      "content": "- Applies network analysis to assess the extent of systemic vulnerabilities in the ECCU banking system.\n- Uses two sets of illustrative stress tests:\n  - Solvency and liquidity shocks to each individual bank and the impact on other banks in the network through their bilateral net asset exposures.\n  - Country and region-wide tail shocks to GDP affecting capital and liquidity of all banks in the shocked jurisdictions, followed by the rippling effects through the regional network."
    },
    {
      "heading": "Methodology and scenarios",
      "content": "- Network analysis based on bilateral net asset exposures among banks.\n- Stress-test scenarios:\n  - Individual-bank solvency and liquidity shocks and subsequent propagation via bilateral exposures.\n  - Jurisdiction-level and region-wide tail GDP shocks affecting bank capital and liquidity, with subsequent network spillovers."
    },
    {
      "heading": "Key findings and interpretations",
      "content": "- The analysis identifies systemic institutions that merit heightened attention by the regulator.\n- Systemic importance is determined by:\n  - The degree of connectivity with the rest of the system.\n  - The extent to which an institution is vulnerable to the failure of other banks.\n- Illustrative stress tests show that both direct bilateral exposures and economy-wide tail shocks can generate rippling effects across the regional banking network."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Regulators should monitor institutions with high connectivity within the network more closely due to their potential to propagate shocks.\n- Supervisory attention should consider both:\n  - Direct bilateral exposure channels among banks.\n  - Indirect channels arising from common exposure to jurisdictional GDP shocks that affect capital and liquidity across banks.\n\n---\n\n Content in this bundle\n\n- Bank Network Analysis in the ECCU, WP/18/162, July 2018\n  - Bank Network Analysis in the ECCU, WP/18/162, July 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Bank Network Analysis in the ECCU, WP/18/162, July 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/07/12/bank-network-analysis-in-the-eccu-46066"
    }
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    "[Markdown version](/en/publications/wp/issues/2018/07/12/bank-network-analysis-in-the-eccu-46066/index.md)",
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    "Authors: Balazs Csonto, Alejandro D Guerson, Alla Myrvoda, Emefa Sewordor",
    "Published: July 12, 2018",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781484367506.001",
    "Applies network analysis to assess the extent of systemic vulnerabilities in the ECCU banking system.",
    "Uses two sets of illustrative stress tests:",
    "Network analysis based on bilateral net asset exposures among banks.",
    "Stress-test scenarios:",
    "The analysis identifies systemic institutions that merit heightened attention by the regulator.",
    "Systemic importance is determined by:",
    "Illustrative stress tests show that both direct bilateral exposures and economy-wide tail shocks can generate rippling effects across the regional banking network.",
    "Regulators should monitor institutions with high connectivity within the network more closely due to their potential to propagate shocks.",
    "Supervisory attention should consider both:",
    "**Bank Network Analysis in the ECCU, WP/18/162, July 2018**"
  ],
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