How bank shocks propagate through production networks
The article discusses a study published in the American Economic Review regarding the interplay between production and financial networks. It explains how bank shocks propagate through supply chains, potentially amplifying the impact on GDP and suggesting that traditional macroeconomic models may underestimate systemic risk.
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Read the original article: https://phys.org/news/2026-05-bank-propagate-production-networks.html
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confidence: 100%
Low risk. This article shows minimal use of propaganda techniques.
fact_checkFact-Check Results
9 claims extracted and verified against multiple sources including cross-references, web search, and Wikipedia.
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Corroborated
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Single Source
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“A new study published in the May 2026 issue of the American Economic Review and authored by an international group of researchers gives a different perspective on how production and financial networks are at interplay.”
SINGLE SOURCE
While web results mention the American Economic Review and general 2026 projections, there is no specific evidence in the provided search results confirming a study published in the May 2026 issue of AER. The specific publication date and issue are not corroborated by the provided evidence.
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— The American Economic Review (AER) is a general-interest economics journal. Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in economics. The journal pu…
https://www.aeaweb.org/journals
https://www.aeaweb.org/journals
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— Global Economy: Steady amid Divergent Forces. January 2026.Resilient growth as technology and adaptability offset trade policy headwinds. Global growth is projected at 3.3 percent for 2026 and 3.2 per…
https://www.imf.org/en/publications/weo/issues/2026/01/19/wo…
https://www.imf.org/en/publications/weo/issues/2026/01/19/wo…
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— Browse all the weekly editions from The Economist by year. You’ve seen the news, now discover the story.The World Ahead 2026. Future-gazing analysis, predictions and speculation. Podcasts. Tune into c…
https://www.economist.com/weeklyedition/archive
https://www.economist.com/weeklyedition/archive
“The research develops a framework that integrates two key dimensions of modern economies: the network of supply relationships among firms and the web of financial connections linking firms to banks.”
CORROBORATED
Multiple web results confirm Kenan Huremovic's research on production and financial networks, specifically mentioning the integration of bank shocks and production networks.
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— Theory into Practice.
https://www.tandfonline.com/doi/abs/10.1080/0040584920954353…
https://www.tandfonline.com/doi/abs/10.1080/0040584920954353…
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— Bank shocks ripple through the production network, traveling both downstream (to customers) and upstream (to suppliers),” explains Kenan Huremovic , researcher in economics at the IMT School for Advan…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
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— Kenan Huremovic's 11 research works with 47 citations, including: Learning Trade Opportunities through Production Network.
https://www.researchgate.net/scientific-contributions/Kenan-…
https://www.researchgate.net/scientific-contributions/Kenan-…
“the paper demonstrates that their interplay is essential to understanding how bank shocks affect the real economy.”
CORROBORATED
The evidence from 'How bank shocks propagate through production networks' and other related search results explicitly discusses how the interplay between these networks is essential to understanding bank shocks.
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— Bank shocks ripple through the production network, traveling both downstream (to customers) and upstream (to suppliers),” explains Kenan Huremovic , researcher in economics at the IMT School for Advan…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
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— The impact of working from home during COVID-19 on work and life.
https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1…
https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1…
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— Geofinance—broadly understood as the strategic use of financial systems, tools, and instruments (like sanctions, currency dominance, investment flows, and payment networks) to advance geopolitical obj…
https://www.linkedin.com/pulse/overlooked-financial-frontlin…
https://www.linkedin.com/pulse/overlooked-financial-frontlin…
“The findings reveal that the interaction between financial and production networks amplifies the effects of bank shocks by a substantial margin.”
CORROBORATED
The search results explicitly state that the interaction between financial and production networks amplifies the effects of bank shocks by a substantial margin.
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— The findings reveal that the interaction between financial and production networks amplifies the effects of bank shocks by substantial margin.“We find that these network effects amplify the impact of …
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
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— @tainab : The algorithmic imaginary: exploring the ordinary affects of...
https://www.tandfonline.com/doi/full/10.1080/1369118X.2016.1…
https://www.tandfonline.com/doi/full/10.1080/1369118X.2016.1…
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— Shock propagation is modeled within a multilayer network comprising production, bank-firm, and interbank connections to simulate systemic risk. A firm failure in one sector initiates a cascade effect,…
https://minority-mindset.com/mapping-economic-risk-how-inter…
https://minority-mindset.com/mapping-economic-risk-how-inter…
“Bank shocks ripple through the production network, traveling both downstream (to customers) and upstream (to suppliers)”
CORROBORATED
Multiple sources explicitly state that bank shocks ripple through the production network, traveling both downstream to customers and upstream to suppliers.
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NEUTRAL
— Bank shocks ripple through the production network, traveling both downstream (to customers) and upstream (to suppliers),” explains Kenan Huremovic , researcher in economics at the IMT School for Advan…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
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— We find that propagation through supply chains contributes significantly to a firm’s probability of default. Therefore, the direct effects found in the literature significantly underestimate the total…
https://cep.lse.ac.uk/pubs/download/dp1699.pdf
https://cep.lse.ac.uk/pubs/download/dp1699.pdf
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— We show that bank shocks originating in the financial sector propagate upstream and downstream along the production network and triple the impact of direct bank shocks.
https://www.researchgate.net/publication/356322967_Financial…
https://www.researchgate.net/publication/356322967_Financial…
“We find that these network effects amplify the impact of bank shocks on GDP by nearly 50%.”
CORROBORATED
The specific figure of 'nearly 50%' amplification of the impact of bank shocks on GDP is explicitly mentioned in the search results.
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— “We find that these network effects amplify the impact of bank shocks on GDP by nearly 50%. Importantly, shocks to firms’ distant suppliers and customers contribute as much to this aggregate effect as…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
https://www.brightsurf.com/news/LN2GX241/how-bank-shocks-pro…
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— How do we measure the health of an economy? The most common way is by looking at its gross domestic product, or GDP. But what does that mean exactly?
https://www.youtube.com/watch?v=Wy4TGV-tPd8
https://www.youtube.com/watch?v=Wy4TGV-tPd8
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— Which bank-level features affect the exposure of banks to monetary policy and house price shocks? We find that average bank risk declines, and average bank lending increases, following expansionary sh…
https://www.econstor.eu/bitstream/10419/41621/1/63945609X.pd…
https://www.econstor.eu/bitstream/10419/41621/1/63945609X.pd…
“shocks to firms' distant suppliers and customers contribute as much to this aggregate effect as those affecting their direct customers and suppliers.”
CORROBORATED
Three different search results explicitly confirm that shocks to distant suppliers and customers contribute as much to the aggregate effect as those affecting direct customers and suppliers.
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— Importantly, shocks to firms' distant suppliers and customers contribute as much to this aggregate effect as those affecting their direct customers and suppliers."
https://phys.org/news/2026-05-bank-propagate-production-netw…
https://phys.org/news/2026-05-bank-propagate-production-netw…
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— Importantly, shocks to firms' distant suppliers and customers contribute as much to this aggregate effect as those affecting their direct customers and suppliers".
https://www.imtlucca.it/en/news/how-bank-shocks-propagate-th…
https://www.imtlucca.it/en/news/how-bank-shocks-propagate-th…
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— Such distant linkages, historically overlooked in macroeconomic models, contribute equally to the aggregate downturn as immediate counterparties. This reciprocity between upstream suppliers and downst…
https://scienmag.com/how-bank-shocks-ripple-through-producti…
https://scienmag.com/how-bank-shocks-ripple-through-producti…
“Kenan Huremovic, researcher in economics at the IMT School for Advanced Studies Lucca, and one of the authors of the paper.”
VERIFIED
Multiple authoritative sources (IMT School for Advanced Studies Lucca and SSRN) confirm Kenan Huremovic's role as a researcher and author of the paper 'Production and Financial Networks in Interplay'.
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— Kenan Huremovic’s research while affiliated with IMT School for Advanced Studies Lucca and other places.
https://www.researchgate.net/scientific-contributions/Kenan-…
https://www.researchgate.net/scientific-contributions/Kenan-…
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— Kenan Huremovic. IMT School for Advanced Studies Lucca.Bocconi University; Universidad de Alicante - Department of Economic Analysis; European University Institute. Multiple version icon There are 2 v…
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4657236
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4657236
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— Kenan Huremovic is an academic researcher from IMT Institute for Advanced Studies Lucca. The author has contributed to research in topics: Supply chain & Network topology. The author has an hindex of …
https://scispace.com/authors/kenan-huremovic-36rakzf2q7
https://scispace.com/authors/kenan-huremovic-36rakzf2q7
“Publication details: Kenan Huremović et al, Production and Financial Networks in Interplay, American Economic Review (2026). DOI: 10.1257/aer.20201088”
INSUFFICIENT EVIDENCE
No evidence was found in the search results to confirm the specific DOI (10.1257/aer.20201088) or the exact publication year of 2026 for this specific paper in the AER.
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Disclaimer: This analysis is generated by AI and should be used as a starting point for critical thinking, not as definitive truth. Claims are verified against publicly available sources. Always consult the original article and additional sources for complete context.