Financial giants at risk: New study reveals key factors driving systemic risk.
The article explores how to measure and understand systemic risk in the financial sector using option markets. By analyzing the value-at-risks of US financial companies and their impact on the overall sector, the researchers found that factors like company size, leverage, and market valuation metrics play a significant role in determining systemic risk. This new approach provides insights into how individual company risks can affect the entire financial sector, shedding light on key determinants of systemic risk.