Liquidity Hoarding in Financial Networks: The Role of Structural Uncertainty

Figure 12

The impact of exogenous manipulation of confidence on the level of total assets () in the system. Two applied manipulations of follow normal distribution with the same mean and different variances: [derived from the complete information (CI) scenario] and [derived from the local information (LI) LI1 scenario]. The higher variance corresponds to the faster decline of total assets in the system. CI is a scenario in which a bank has access to information from all other banks in the network. LI1 is a scenario in which a bank has access only to information from banks at distance 1.