Central bank refinancing, interbank markets and the hypothesis of liquidity hoarding: evidence from a euro-area banking system

Massimiliano Affinito

No 1607, Working Paper Series from European Central Bank

Abstract: This paper tests the hypothesis of liquidity hoarding in the Italian banking system during the 2007-2011 global financial crisis. According to this hypothesis, in periods of crisis, interbank markets stop working and central banks' interventions are ineffective because banks hoard the liquidity injected rather than channelling it on to other banks and the real economy. The test uses monthly data at banking-group level for all intermediaries operating in Italy between January 1999 and August 2011. This is the first paper to use micro data to analyse the relationship between single banks' positions vis- JEL Classification: G21, E52, C30

Keywords: central bank refinancing; financial crisis; interbank market; liquidity (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-eec and nep-mon
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Citations: View citations in EconPapers (10)

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Working Paper: Central bank refinancing, interbank markets, and the hypothesis of liquidity hoarding: evidence from a euro-area banking system (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20131607

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