Essays

Tagged "contagion"

1 essay touching on contagion.

CONTAGION CHAINBANK A DEFAULTS ON ₹80 CR

Does it stop here?

One default. Four channels it can travel through.

01Direct exposure

Bank B holds Bank A's debt directly

Bank B sells assets fast, price drops for everyone holding them

03Liquidity freeze

Lenders stop rolling funding for anyone who looks like Bank A

A healthy Bank C sees a run anyway, on rumor alone

Central bank steps in as lender of last resort

4 CHANNELS · 1 FIREBREAK

The Financial Dominoes: Why One Default Rarely Stays One Default

A bank doesn't fail alone.

A bank doesn't fail alone. It fails into every balance sheet that was counting on it — and whether the damage stops at one domino or takes down the row depends on channels most people never see.

Surya · 7 min read

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