{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,1,18]],"date-time":"2026-01-18T22:43:05Z","timestamp":1768776185587,"version":"3.49.0"},"reference-count":32,"publisher":"Institute for Operations Research and the Management Sciences (INFORMS)","issue":"7","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Management Science"],"published-print":{"date-parts":[[2025,7]]},"abstract":"<jats:p> Most research on systemic stability assumes an economy where banks are subject to exogenous shocks. However, in practice, banks choose their exposure to risk. I show that there exists a network risk-taking externality: the risk exposure choices made by connected banks are strategically complementary. Banks within financial networks, especially densely connected ones, become endogenously exposed to excessive risks. The theory offers several novel perspectives on policy debates. 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