Interbank Market Integration under Asymmetric Information

Xavier Freixas ()

The Review of Financial Studies, 2005, vol. 18, issue 2, 459-490

Abstract: Cross-country bank lending appears to be subject to market imperfections leading to persistent interest rate differentials. In a model where banks need to cope with liquidity shocks by borrowing or by liquidating assets, we study the scope for international interbank market integration with unsecured lending when cross-country information is noisy. We find that an equilibrium with integrated markets need not always exist, and that it may coexist with one characterized by segmentation. A repo market reduces interest rate spreads and improves upon the segmentation equilibrium. However, it may destroy the unsecured integrated equilibrium. Copyright 2005, Oxford University Press.

Date: 2005
References: Add references at CitEc
Citations: View citations in EconPapers (103)

Downloads: (external link)
http://hdl.handle.net/10.1093/rfs/hhi001 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Interbank Market Integration under Asymmetric Information (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:rfinst:v:18:y:2005:i:2:p:459-490

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Review of Financial Studies is currently edited by Itay Goldstein

More articles in The Review of Financial Studies from Society for Financial Studies Oxford University Press, Journals Department, 2001 Evans Road, Cary, NC 27513 USA.. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().