Complex Financial Networks

Abstract

The concepts and dynamic processes related to complex financial networks (CFNs) are explored in this review article. After providing a definition of CFNs, we discuss the most important dynamic process associated with them, i.e., contagion. We then examine the relationship between interconnectedness and systemic risk in CFNs. Next, we discuss approaches to the measurement of systemic risk and the challenges associated with this task. Finally, we highlight three research avenues that, in our opinion, are crucial for a better understanding of the dynamics of the contagion process in CFNs: loss distribution regime, endogenous complex networks, and multilayer complex networks.