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This paper empirically investigates the structural evolution of the US financial systems. It particularly aims to explore if the structure of the financial systems changes when the economy enters a recession.

The empirical analysis is conducted through the statistical approach of principal components analysis (PCA) and the graph theoretic approach of minimum spanning trees (MSTs).

The PCA results suggest that the VIX was the dominant factor influencing the financial system prior to the recession; however, the monetary policy represented by the three‐month T‐bill yield became the leading factor in the system during the recession. By analyzing the MSTs, we find evidence that the structure of the financial system during the economic recession is substantially different from that during the period of economic expansion. Moreover, we discover that the financial markets are more integrated during the economic recession. The much stronger integration of the financial system was found to start right before the advent of the recession.

Research findings will help individuals, institutions, regulators, central bankers better understand the market structure under the economic turmoil, so more efficient strategies can be used to minimize the systemic risk.

This study compares the structure of the US financial markets in economic expansion and contraction periods. The structural dynamics of the financial system are explored, focusing on the recent economic recession triggered by the US subprime mortgage crisis. We introduce a new systemic risk measure.

This paper aims to present a recent history of developments and innovations that, along with advances in information technology, have caused fundamental changes in the way that financial risk is created, transformed, transported and extinguished in modern financial intermediation systems. A review and critique of the global supervisory response to these developments is presented.

A bottom-up approach to the capture, recording, disaggregation, re-composition and measurement of new, standardized, basic elements of risk that the authors refer to as risk quanta is proposed.

This approach provides a clearer understanding of the financial world that the people live in today and creates a robust information platform to build innovations, advancements and economic growth in the future.

This approach provides decision-makers with a clearer understanding of the financial world that the people live in today and creates a robust information platform to build innovations, advancements and economic growth in the future.

This approach provides financial market participants and the public with a clearer understanding of the financial system and creates a robust information platform to build innovations, advancements and economic growth in the future.

This approach is more comprehensive unlike current international proposals for a global financial risk framework.