<p>Economic integration has led to the formation of complex network structures among firms and has significantly impacted banks’ risk management. This paper empirically examines cross-industry risk contagion between banks and firms, specifically focusing on real estate firms and their upstream suppliers, which can form networks through activities such as trade credit. The findings reveal that while shocks to real estate firms do not directly result in bank defaults, even when inter-firm networks are present, they do lead to increased asset losses for banks. Furthermore, the analysis indicates that multilayer networks characterized by higher heterogeneity are more vulnerable and tend to amplify risk. Finally, compared to benchmark networks where no inter-firm connections exist, multilayer networks significantly amplify risk. Based on these findings, we recommend that regulators and policymakers take the network effects among firms into account when developing risk control frameworks, in order to better address the risk contagion during sudden or unforeseen events.</p>