ORIGINAL RESEARCH article
Front. Phys.
Sec. Social Physics
Volume 13 - 2025 | doi: 10.3389/fphy.2025.1614995
This article is part of the Research TopicFinance and Production Complex SystemsView all 20 articles
Research on the Risk Contagion of Banks Holding Subordinated Debt from the Perspective of Risk Preferences
Provisionally accepted
- 1Nanjing University of Information Science and Technology, Nanjing, China
- 2University of Reading, Reading, England, United Kingdom
Select one of your emails
You have multiple emails registered with Frontiers:
Notify me on publication
Please enter your email address:
If you already have an account, please login
You don't have a Frontiers account ? You can register here
Under the background of global integration, banking system stability is crucial for financial market stability. Subordinated debt, as a financial tool, can increase the capital stability of banks, but it can also bring capital losses to creditor banks when the issuing bank goes bankrupt. This paper, starting from the perspective of risk preference, studies the transmission mechanism of systemic risk when banks mutually hold subordinated debt. This paper comprehensively considers the effects of interbank lending, investment coupling, and mutual holdings of subordinated debt, and constructs a multichannel risk contagion model based on risk preference. Through simulation analysis, we find that factors such as savings rates and volatility, reserve requirements, investment returns and volatility significantly affect banks' systemic risk, while the impact of interbank lending rates is relatively small. The research results provide theoretical support for regulatory agencies to identify risk contagion pathways and formulate preventive strategies, and also provide ideas for future research directions such as calibrating model parameters based on real data and introducing more heterogeneous bank behavior assumptions.
Keywords: Systemic risks, Subordinated debt, Risk preference, Banking network, Dynamic evolution
Received: 20 Apr 2025; Accepted: 15 Jul 2025.
Copyright: © 2025 Chen, Jiang, Zhuang and Meng. This is an open-access article distributed under the terms of the Creative Commons Attribution License (CC BY). The use, distribution or reproduction in other forums is permitted, provided the original author(s) or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. No use, distribution or reproduction is permitted which does not comply with these terms.
* Correspondence: Shanshan Jiang, Nanjing University of Information Science and Technology, Nanjing, China
Disclaimer: All claims expressed in this article are solely those of the authors and do not necessarily represent those of their affiliated organizations, or those of the publisher, the editors and the reviewers. Any product that may be evaluated in this article or claim that may be made by its manufacturer is not guaranteed or endorsed by the publisher.