Liquidity Hoarding in Financial Networks: The Role of Structural Uncertainty

Figure 4

Information availability in the banking network of 120 banks in two local information (LI) scenarios: LI1 and LI2. In the LI1 scenario (a), information is available up to distance 1 in the network. That is, the bank in blue receives information only from the orange banks—its immediate neighbors. In the LI2 scenario (b), information is available up to distance 2. That is, the bank in blue receives information not only from the orange banks but also from the red banks—its neighbors of neighbors. The remaining banks are colored in grey. The node size is weighted by its degree. The network is constructed using the default values of model parameters (Section 3.2).

(a)

(b)