The first authors to consider structural models for financial systems where each firm could own the debt of other firms were Eisenberg and Noe in 2001. Suzuki (2002) extended the analysis of interconnectedness by modeling the cross ownership of both debt and equity claims. Building on Eisenberg and Noe (2001), Cifuentes, Ferrucci, and Shin (2005) considered the effect of costs of default on network stability. Elsinger's further developed the Eisenberg and Noe (2001) model by incorporating financial claims of differing priority.
