Explaining breakdowns in interbank lending: A bilateral bargaining model

Uwe Vollmer and Harald Wiese

Finance Research Letters, 2014, vol. 11, issue 3, 247-253

Abstract: The paper provides a simple model for interbank loans. Since interbank trades are usually over-the-counter transactions, we use a bilateral bargaining model and apply the Nash bargaining solution. We determine the threat points and the bargaining frontier of debtor and creditor banks. We ask under which conditions interbank lending will break down.

Keywords: Interbank lending; Nash bargaining solution (search for similar items in EconPapers)
JEL-codes: C71 C78 E43 G21 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:11:y:2014:i:3:p:247-253

DOI: 10.1016/j.frl.2014.02.004

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