Liquidity Hoarding in Financial Networks: The Role of Structural Uncertainty

Figure 10

Probability of systemic breakdown for various magnitudes and speeds of confidence () decline. The magnitude of decline refers to the percentage of the initial value of that is lost. The speed of decline is determined by the parameter of the exponential function ; the greater the value of , the greater the speed of decline. The sudden decline of () is associated with a sharp increase in the probability of systemic breakdown, especially in the cases of 20% and 30% of decline.