Relationships in the Interbank Market
Jens Eisenschmidt () and
Cyril Monnet ()
Review of Economic Dynamics, 2020, vol. 35, 170-191
The market for central bank reserves is mainly over-the-counter and exhibits a core-periphery network structure. This paper develops a model of relationship lending in the unsecured interbank market. Banks choose to build relationships in order to insure against liquidity shocks and to economize on the cost to trade in the interbank market. Relationships can explain some anomalies in the level of interest rates â€“ e.g., the fact that banks sometimes trade below the central bank's deposit rate, as we find using data from the ECB. The model also helps understand how monetary policy affects the network structure of the interbank market and its functioning. (Copyright: Elsevier)
Keywords: Relationships; Interbank market; Core-periphery; Networks; Corridor system (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed
Downloads: (external link)
Access to full texts is restricted to ScienceDirect subscribers and institutional members. See http://www.sciencedirect.com/ for details.
Software Item: Code and data files for "Relationships in the Interbank Market" (2019)
Working Paper: Online Appendix to "Relationships in the Interbank Market" (2019)
Working Paper: Relationships in the Interbank Market (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:issued:18-238
Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/
Access Statistics for this article
Review of Economic Dynamics is currently edited by Loukas Karabarbounis
More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().