The DebtRank algorithm has been increasingly investigated as a method to estimate the impact of shocks in financial networks, as it overcomes the limitations of the traditional default-cascade approaches. Here we formulate a dynamical microscopic the
ory of instability for financial networks by iterating balance sheet identities of individual banks and by assuming a simple rule for the transfer of shocks from borrowers to lenders. By doing so, we generalise the DebtRank formulation, both providing an interpretation of the effective dynamics in terms of basic accounting principles and preventing the underestimation of losses on certain network topologies. Depending on the structure of the interbank leverage matrix the dynamics is either stable, in which case the asymptotic state can be computed analytically, or unstable, meaning that at least one bank will default. We apply this framework to a dataset of the top listed European banks in the period 2008 - 2013. We find that network effects can generate an amplification of exogenous shocks of a factor ranging between three (in normal periods) and six (during the crisis) when we stress the system with a 0.5% shock on external (i.e. non-interbank) assets for all banks.
System-level properties of metabolic networks may be the direct product of natural selection or arise as a by-product of selection on other properties. Here we study the effect of direct selective pressure for growth or viability in particular enviro
nments on two properties of metabolic networks: latent versatility to function in additional environments and carbon usage efficiency. Using a Markov Chain Monte Carlo (MCMC) sampling based on Flux Balance Analysis (FBA), we sample from a known biochemical universe random viable metabolic networks that differ in the number of directly constrained environments. We find that the latent versatility of sampled metabolic networks increases with the number of directly constrained environments and with the size of the networks. We then show that the average carbon wastage of sampled metabolic networks across the constrained environments decreases with the number of directly constrained environments and with the size of the networks. Our work expands the growing body of evidence about nonadaptive origins of key functional properties of biological networks.
