Do banking groups shape the network structure? Evidence from Turkish interbank market

Tuba Pelin Sümer and Süheyla Özyıldırım

International Review of Financial Analysis, 2019, vol. 66, issue C

Abstract: Using a unique exposure data on Turkish banking system (disaggregated according to bank ownership structure and instrument level), we study the effects of ownership structure on the interbank network structure. During the sample period of 2003–2017, we observe that foreign and state deposit banks are the dominant institutions shaping the structure of the network under different contracts. Foreign banks, in particular, have a higher coreness vector in derivative exposures through their comparative advantage in offsetting derivative transactions. Moreover, our findings suggest that when foreign investors acquire domestic banks, the network structures of the acquired bank change considerably. We also present evidence that local and Basel III regulations play a significant role in the formation of the network structure through liquidity channel. We found highly liquid large banks and well-capitalized non-large banks have become more centralized in the interbank security market. The central bank's efforts to restore liquidity in the money markets during and after the global financial crisis seem to have increased the central role of foreign deposit banks in the overnight lending market against state and large private deposit banks.

Keywords: Interbank markets; Core-periphery; Ownership structure; Financial regulation (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:66:y:2019:i:c:s1057521919303114

DOI: 10.1016/j.irfa.2019.101387

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