Instruct: Identify the main and secondary category of Arxiv papers based on the titles and abstracts
Query: Risk trading, network topology, and banking regulation   In the context of understanding the nature of the risk transformation process
of the financial system we propose an iterative risk-trading game between
several agents who build their trading strategies based on a general utility
setting. The game is studied numerically for different network topologies.
Consequences of topology are shown for the wealth time-series of agents, for
the safety and efficiency of various types of networks. The proposed setup
allows an analysis of the effects of different approaches to banking regulation
as currently suggested by the Basle Committee of Banking Supervision. We find a
phase transition-like phenomenon, where the Basle parameter plays the role of
temperature and system safety serves as the order parameter. This result
suggests the existence of an optimal regulation parameter. As a consequence a
tightening of the current regulatory framework does not necessarily lead to an
improvement of the safety of the banking system. Moreover, we show that banking
systems with local risk-sharing cooperations have higher global default rates
than systems with low cyclicality.

0
The categories of this paper are: hep-ph
15
The categories of this paper are: nucl-ex
29
The categories of this paper are: funct-an
32
The categories of this paper are: atom-ph
6
The categories of this paper are: astro-ph
10
The categories of this paper are: q-bio
20
The categories of this paper are: acc-phys
26
The categories of this paper are: bayes-an
27
The categories of this paper are: comp-gas
7
The categories of this paper are: hep-th
22
The categories of this paper are: chao-dyn
17
The categories of this paper are: q-fin
1
The categories of this paper are: cs
28
The categories of this paper are: alg-geom
31
The categories of this paper are: ao-sci
13
The categories of this paper are: quant-ph