Greater interconnected banking systems pose instability threat: IMF paper

Policies that promote greater interconnected banking systems can offer significant benefits but also make some banking sectors more fragile, according to an International Monetary Fund paper published on Monday.

Martin Cihák, Sònia Muñoz and Ryan Scuzzarella, the paper's authors, use model simulations and econometric estimates based on a worldwide data set to examine whether the stability of a country's banking system increases the more connected it is to the global banking network.

The authors