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From Interaction to Business Fluctuations: How Credit Network Explains Cycles

Emanuele Ciola & Gabriele Tedeschi

Journal of Money, Credit and Banking2026https://doi.org/10.1111/jmcb.70024article
AJG 4ABDC A*
Weight
0.50

Abstract

We investigate the dynamic properties of capital flows in the U.S. economy by developing and estimating a heterogeneous agents macro‐economic model in which credit, deposits, and interbank relations evolve endogenously through optimal decentralized choices under limited information. Our findings suggest that severe financial crises stem from the endogenous formation of a highly centralized financial sector. In this setting, a self‐reinforcing bank run against systemic intermediaries, although rare, can freeze the interbank market, disrupt a large share of credit lines, and trigger a deep recession. These results underscore the need for prompt policy intervention to prevent cascading effects and costly bailouts.

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https://doi.org/https://doi.org/10.1111/jmcb.70024

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@article{emanuele2026,
  title        = {{From Interaction to Business Fluctuations: How Credit Network Explains Cycles}},
  author       = {Emanuele Ciola & Gabriele Tedeschi},
  journal      = {Journal of Money, Credit and Banking},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1111/jmcb.70024},
}

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From Interaction to Business Fluctuations: How Credit Network Explains Cycles

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

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