Abstract
The rapid withdrawal in the financial market due to the collapse of Silicon Valley Banks in 2023 brought reflections on the 2008 financial crisis. Past research has focused on modeling different types of financial networks that help explain bankruptcys contagion process. This paper discusses how these networks help to explain the 2008 financial crisis, followed by shedding light on the global impacts (European, Latin American, and Asian markets) of the crisis in terms of networks. The last section further discusses potential policies that could be used to prevent or predict severe contagion depending on different network structures, including adjusting the level of portfolio diversification for international investment, for example. This paper sheds light on the importance of financial networks regarding their contagion channel and wide application in the real economy.
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