Ecology, physics and finance
26 Jan 2011
A lunchtime symposium of physicists and financiers on banking ecosystems, financial risk and the building blocks of economic complexity.
In the run-up to the 2008 financial crisis, an increasingly elaborate set of financial instruments emerged, intended to optimize returns to individual institutions with seemingly minimal risk. Little attention was given to their possible effects on the stability of the system as a whole, and the tools available to detect latent stress were qualitative and unsophisticated.
In this symposium for physicists, bankers and policy advisors, we explore the interplay between complexity and stability in deliberately simplified models of financial and trade networks. We draw on analogies with the dynamics of ecological food webs, the spread of infectious diseases and combinatorial models of production. Luciano Pietronero, Fellow of the London Institute and Director of the Institute for Complex Systems, talks about the building blocks of economic complexity and the forecasting of financial crises. Lord May of Oxford, former Government Chief Scientific Adviser and recently President of the Royal Society, discusses his work on systemic risk in banking ecosystems, reported in this week’s cover article in Nature.
London Institute Symposia
London Institute Symposia are small research and technology conferences for up to 40 people that take place in the Institute. Symposia can last from a few hours to a few days, with attendees ranging from academic researchers to industry practitioners to the defence community.