Financial Contagion in Networks

This paper provides an introduction to the literature on financial contagion in networks. In the first part, we consider contagion via transmission of shocks, i.e. abrupt drops in the flow of revenue to one firm, which affect other firms connected to it through financial linkages. We then study informational contagion, understood as the process whereby a shock to one market is transmitted to other markets via the information revealed in the first market