Kaiwei Jia, School of Business Administration, Liaoning Technical University, Huludao, China
Xintian Li, School of Business Administration, Liaoning Technical University, Huludao, China

Abstract: The study investigates how interlocking director networks influence systemic risk in financial institutions. Drawing on social network theory and resource dependence theory, using a sample of 129 A-share listed financial institutions in China from 2009 to 2023, we find that interlocking director networks significantly amplify systemic risk through two distinct mechanisms: (a) increasing individual institutions' risk exposure through information transmission, and (b) promoting governance convergence that spreads negative externalities, ultimately raising stock price synchronicity and contributing to systemic risk escalation. Further analysis reveals that strengthened internal and external governance mitigates this effect. By examining the underlying mechanisms, we aim to provide regulatory insights for mitigating cross-institutional risk transmission and improving governance practices.

Keywords: interlocking director networks, systemic risk, governance convergence, individual risk