Interbank relationship lending: A network perspective

Carlos León and Javier Miguélez

Physica A: Statistical Mechanics and its Applications, 2021, vol. 573, issue C

Abstract: Stable and strong unsecured lending relations among financial institutions have been credited as the mainstay of interbank markets and financial stability. We measure how stable interbank relations are in Colombia by calculating interbank networks’ survival ratio, i.e. the fraction of linkages found in consecutive networks. On average, about 57 percent of linkages survive from one day to the next. About 36, 28, and 22 percent of linkages survive a 5-, 10-, and 20-day period, respectively. Results are robust to the exclusion of low-value linkages, intraday lending, and non-banking institutions. A non-parametric test discards randomness as a plausible source of observed survival ratios. Preliminary examination of survival ratios during the first weeks of the financial turmoil caused by the Covid-19 pandemic and falling oil price suggests that trust in the interbank market was not seriously affected. Consequently, we conclude that stable and strong interbank lending relations exist in the Colombian market.

Keywords: Interbank; Lending; Survival; Linkage; Network (search for similar items in EconPapers)
JEL-codes: G10 G21 G23 L14 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:phsmap:v:573:y:2021:i:c:s0378437121001941

DOI: 10.1016/j.physa.2021.125922

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