Prediction of Systemic Risk Contagion Based on a Dynamic Complex Network Model Using Machine Learning Algorithm

Figure 6

Impacts of the capital reserves ratio on the proportion of unaffected banks by financial contagion. The left panel shows the proportion of unaffected banks by financial contagion as a wave of cascading defaults and a function of the percentage of the reserves ratio (left panel). The right panel shows a cross-sectional view of the left panel in which the different colored dotted lines represent different waves of cascading defaults. We use 1000 Monte Carlo simulations to develop the networks with different types of targeted default strategies.

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