No abstract

Financial institutions are interconnected directly by holding debt claims against each other (the network channel), and they are also bound by the market when selling assets to raise cash in distressful circumstances (the liquidity channel). The goal of our study is to investigate how these two channels of risk interact to propagate individual defaults to a systemwide catastrophe. We formulate a constrained optimization problem that incorporates both channels of risk, and exploit the problem structure to generate the solution (to the clearing payment vector) via a partition algorithm. Through sensitivity analysis, we are able to identify two key contributors to financial systemic risk, the network multiplier and the liquidity amplifier, and to discern the qualitative difference between the two, confirming that the market liquidity effect has a great potential to cause systemwide contagion. We illustrate the network and market liquidity effects-in particular, the significance of the latter-in the formation of systemic risk with data from the European banking system. Our results contribute to a better understanding of the effectiveness of certain policy interventions. In addition, our algorithm can be used to pin down the changes of the net worth (marked to market) of each bank in the system as the spillover effect spreads, so as to estimate the extent of contagion, and to provide a metric of financial resilience as well. Our framework can also be easily extended to incorporate the effect of bankruptcy costs.

Type III secretion systems (T3SSs) are crucial for bacterial infections because they deliver effector proteins into host cells. The Escherichia coli type III secretion system 2 (ETT2) is present in the majority of E. coli strains, and although it is degenerate, ETT2 regulates bacterial virulence. An ATPase is essential for T3SS secretion, but the function of the ETT2 ATPase has not been demonstrated. Here, we show that EivC is homologous to the β subunit of F0F1 ATPases and it possesses ATPase activity. To investigate the effects of ETT2 ATPase EivC on the phenotype and virulence of avian pathogenic Escherichia coli (APEC), eivC mutant and complemented strains were constructed and characterized. Inactivation of eivC led to impaired flagella production and augmented fimbriae on the bacterial surface, and, consequently, reduced bacterial motility. In addition, the eivC mutant strain exhibited attenuated virulence in ducks, diminished serum resistance, reduced survival in macrophage cells and in ducks, upregulated fimbrial gene expression, and downregulated flagellar and virulence gene expression. The expression of the inflammatory cytokines interleukin (IL)-1β and IL-8 were increased in HD-11 macrophages infected with the eivC mutant strain, compared with the wild-type strain. These virulence-related phenotypes were restored by genetic complementation. These findings demonstrate that ETT2 ATPase EivC is involved in the motility and pathogenicity of APEC.