Interconnectedness, systemic risk, and the influencing factors: Some evidence from China's financial institutions

Shan Wu*, Mu Tong, Zhongyi Yang, Tianyi Zhang

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

14 Citations (Scopus)


From the perspective of interconnectedness, we construct a systemic risk spillover network of China's financial institutions. After deconstructing the constructed network and combine with the analysis of the influencing factors, we find that: (i) All industries and institutions within the financial system are highly interconnected, and each sector can act as a risk receiver or risk driver. (ii) During the extreme market conditions, the connectedness between each two financial institutions will increase dramatically. (iii) The network of China's financial institutions has the characteristics of “small world” and “scale-free”, and the overall connection of network structure has significant time-varying characteristics. (iv) The asset size, leverage ratio, SRISK index of financial institutions will influence their connection degree positively, while the current ratio of financial institutions and changes of the real estate climate index have the opposite impacts. Our findings hold important implications for regulations.

Original languageEnglish
Article number125765
JournalPhysica A: Statistical Mechanics and its Applications
Publication statusPublished - 1 May 2021
Externally publishedYes


  • Financial crisis
  • Financial institutions
  • Interconnectedness
  • Systemic risk


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