A survey of network-based analysis and systemic risk measurement

  • Andre R. NeveuEmail author
Regular Article


The financial crisis led to a number of new systemic risk measures and a renewed concern over the risk of contagion. This paper surveys the systemic risk literature with a focus on the importance of contributions made by those emphasizing a network-based approach, and how that compares with more commonly used approaches. Research on systemic risk has generally found that the risk of contagion through domino effects is minimal, and thus emphasized focusing on the resiliency of the financial system to broad macroeconomic shocks. Theoretical, methodological, and empirical work is critically examined to provide insight on how and why regulators have emphasized deregulation, diversification, size-based regulations, and portfolio-based coherent systemic risk measures. Furthermore, in the context of network analysis, this paper reviews and critically assesses newly created systemic risk measures. Network analysis and agent-based modeling approaches to understanding network formation offer promise in helping understand contagion, and also detecting fragile systems before they collapse. Theory and evidence discussed here implies that regulators and researchers need to gain an improved understanding of how topology, capital requirements, and liquidity interact.


Network analysis Systemic risk Financial market regulation Complexity 

JEL Classification

G20 E44 E47 E58 



The author would like to thank Ehsan Ahmed and German Creamer for helpful comments on previous drafts. Several comments by anonymous reviewers have also helped to improve the paper in many ways. The author would also like to thank Adam Diehl for his helpful research assistance. Finally, the author would also like to acknowledge comments from participants at the Agent-based Computational Economics sessions sponsored by the NYC Computational Economics & Complexity Workshop and participants in the Southern Economic Association session on Complexity in Economics and the Social Sciences.


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© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.James Madison UniversityHarrisonburgUSA

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