Contagion in banking system - causes and mechanizm
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Abstract
The text analyzes the causes and mechanizm of contagion in banking system. Three kinds of shocks are considered. First of them is banking panics caused by random shocks as well by fundamental factors. It has been shown why this kind of disturbences is then disperced across the whole system. The second kind of shocks is clesely linked to adjustments of bank balance sheets. The interconection of bank potrtfolios lead to contagion. And last but not least contagion is created in the interbank money market. The reliance of banks on short -term wholesale funds is among the posible sources of finacial linkages which create networks. Character of this networks determines the sensivity of the whole system on the disturbing factors.(original abstract)
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