Abstract
We find central clearing counterparty amplified shocks are due to financial institutions
Acknowledgments
The work of the author was supported by CUHK Direct Grant for Research (Project Code: 4055101). The author would like to thank Kyoung-Kuk Kim for his helpful comments. The author also appreciates valuable feedback from the review team that helped improve the manuscript.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 According to the condition (Equation14(14) (14) ) which we shall see later, one can easily show that both cases lead to strongly admissible CCP systems of which definition will be introduced in Section 4.