The role of credit lines and multiple lending in financial contagion and systemic events

Giuseppe Cappelletti and Paolo Emilio Mistrulli

Journal of Financial Stability, 2023, vol. 67, issue C

Abstract: Banks play a crucial role in providing liquidity to borrowers, particularly during crises (Kashyap et al., 2002 [33]). The existence of multiple lending relationships between banks and borrowers has been seen as an element that reduces the risk of liquidity shortage for debtors (Detragiache et al., 2000). In this paper, we aim to show how the interaction of these two aspects with solvency and liquidity requirements might have implications for the stability of the banking system, which might still need to be fully analyzed.

Keywords: Banking crisis management; Financial contagion; Lines interbank market; Multiple lending credit; Systemic risk (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:67:y:2023:i:c:s1572308923000414

DOI: 10.1016/j.jfs.2023.101141

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