Trading partners in the interbank lending market
Gara Afonso (),
Anna Kovner and
Antoinette Schoar ()
No 620, Staff Reports from Federal Reserve Bank of New York
There is substantial heterogeneity in the structure of trading relationships in the U.S. overnight interbank lending market: Some banks rely on spot transactions, while a majority form stable, concentrated borrowing relationships to hedge liquidity needs. Borrowers pay lower prices and borrow more from their concentrated lenders. When there are exogenous shocks to liquidity supply (days with low GSE lending), concentrated lenders insulate borrowers from the shocks without charging significantly higher interest rates.
Keywords: interbank lending; OTC markets (search for similar items in EconPapers)
JEL-codes: D40 E59 G10 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-mon
Date: 2013, Revised 2014-10-01
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