Liquidity Hoarding in Financial Networks: The Role of Structural Uncertainty

Figure 7

Probability of whole-system breakdown in complete information (CI) and local information (LI) scenarios. The LI1 scenario obtains the highest probability of systemic breakdown in both single-bank shock treatments. LI1 and LI2 = scenarios in which banks have access only to information from banks up to distance 1 and 2, respectively (Figure 15 in Appendix A displays all scenarios).