One of the hottest academic papers in the world right now is Econometric Measures of Connectedness and Systemic Risk in the Finance and Insurance Sectors by professors Monica Billio, Loriana Pelizzon, Andrew W. Lo, and Mila Getmansky.
The paper tries to come up with hard definitions of interconnectedness and systemic risk.
We suspect a big part of the appeal of the paper is simply these two charts, showing financial industry interconnectedness in the 90s, and then prior to the 2008 crisis. The dramatic increase in linkages between banks, hedge funds, insurance companies, and other investment companies, is remarkable.
Read more and comment: http://articles.businessinsider.com/2011-12-09/wall_street/30497201_1_charts-systemic-risk-scroll
