Unraveling Double Shocks: An In-Depth Analysis of Risk Contagion in China’s Inter-Bank Market

In an era marked by intricate financial networks and evolving market dynamics, this research delves into the labyrinth of risk contagion in China’s inter-bank market to enhance financial stability. Focusing on the double shocks of counterparty breach and liquidity crisis, we scrutinize the systemic vulnerabilities and financial implications for both systemically and non-systemically important banks. Our study employs a comprehensive simulation approach, utilizing data from 157 banks in 2021, covering most Chinese provinces and representing approximately 80