Interbank relationship lending: A network perspective
León,Carlos Miguélez,Javier
León,Carlos
Miguélez,Javier
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.
Description
Date
2021-07-01
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
Organizational Units
Journal Issue
Keywords
Interbank, Lending, Linkage, Network, Survival, SDG 10 - Reduced Inequalities
Citation
León, C & Miguélez, J 2021, 'Interbank relationship lending : A network perspective', Physica A-Statistical Mechanics and its Applications, vol. 573, 125922. https://doi.org/10.1016/j.physa.2021.125922
License
info:eu-repo/semantics/closedAccess