Clearing Algorithms and Network Centrality

  • Christoph SiebenbrunnerEmail author
Conference paper
Part of the Studies in Computational Intelligence book series (SCI, volume 813)


I show that the solution of a standard clearing model commonly used in contagion analyses for financial systems can be expressed as a specific form of a generalized Katz centrality measure under conditions that correspond to a system-wide shock. This result provides a formal explanation for earlier empirical results which showed that Katz-type centrality measures are closely related to contagiousness. It also allows assessing the assumptions that one is making when using such centrality measures as systemic risk indicators. I conclude that these assumptions should be considered too strong and that, from a theoretical perspective, clearing models should be given preference over centrality measures in systemic risk analyses.


Network centrality Systemic risk 


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© Springer Nature Switzerland AG 2019

Authors and Affiliations

  1. 1.University of Oxford, Mathematical InstituteOxfordUK

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