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The Project

[M]acroprudential approach (. . . ) can involve heavier informational requirements and
more-complex analytic frameworks. In particular, because of the highly interconnected nature
of our financial system, macroprudential oversight must be concerned with all major
segments of the financial sector, including financial institutions, markets, and infrastructures;
it must also place particular emphasis on understanding the complex linkages and
interdependencies among institutions and markets, as these linkages determine how instability
may be propagated throughout the system.

Ben Bernanke, Chairman of the Fed, in a speech dated from May 5, 2011

In order to prevent another widespread failure of the global financial system, academics and practitioners alike have begun to deviate from the traditional neo-classical and Rational Expectations Efficient Market (REEM) schools of thought and propose an alternative framework that will take into account:

  • Agents heterogeneity and the presence of two way interdependencies between agents and the aggregate properties of the system ;
  • Emergent phenomena whenever the standard paradigm relies on a restrictive definition of equilibrium that is incompatible with real-world observations ;
  • Nonlinear phenomena to go beyond restrictive linear specifications, especially when modelling cross-sectional dependencies

Those elements are at core of the Complexity science that gathers various literatures in multiple disciplines from physics to sociology, epidemiology, biology and economics and finance. Our aim within this research programme is therefore to develop a multidisciplinary pole of expertise to propose both fundamental and applied research works on those issues in order to better understand contemporaneous financial fragility and orientate policy-makers in the design of efficient regulatory framework for the banking and financial system.

The Financial CompleX Systems (FiXS) group gathers 4 senior and 8 junior researchers across 2 universities and various research centres:

  • Université de Namur
    • Center for Research in Finance and Management (CeReFim)
    • Namur Center for CompleX Systems (NaXyS)
  • Université catholique de Louvain
    • Center for Operations Research and Econometrics (CORE)
    • Louvain School of Management (LSM)

The project benefits from various sources of funding:

  • ARC grant (Projet d'Actions de Recherche Concertées) #13/17-055 granted by the Académie universitaire Louvain
  • FSR grant (Fonds spéciaux de recherche)
  • Chaire Ageas
  • National Bank of Belgium (NBB)