Interpersonal versus interbank lending networks: The role of intermediation in risk-sharing

Edina Berlinger, Márton Gosztonyi, Dániel Havran and Zoltán Pollák

Emerging Markets Review, 2023, vol. 54, issue C

Abstract: Analyzing the interpersonal lending network of a Hungarian village in a disadvantaged region, we find strong intermediary activity and a tiered core-periphery structure. We show that the main motive behind lending is not altruism or profit-seeking, but risk-sharing which is the most accentuated in poor-to-poor and Roma-to-Roma relations. Comparing this informal lending market to a formal interbank market, we find more similarities than differences. In both markets, intermediation is a key element in risk-sharing and an effective tool to cope with liquidity risk. Regulatory and development policies should respect the existing institutions of risk-sharing.

Keywords: Financial exclusion; Liquidity management; Core-periphery; Intermediation; Risk-sharing; Reciprocity (search for similar items in EconPapers)
JEL-codes: G21 H31 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:54:y:2023:i:c:s1566014122001066

DOI: 10.1016/j.ememar.2022.100989

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