Working Paper
Interbank tiering and money center banks
Abstract: This paper provides evidence that interbank markets are tiered rather than flat, in the sense that most banks do not lend to each other directly but through money center banks acting as intermediaries. We capture the concept of tiering by developing a core-periphery model, and devise a procedure for tting the model to real-world networks. Using Bundesbank data on bilateral interbank exposures among 1800 banks, we find strong evidence of tiering in the German banking system. Econometrically, bank-specific features, such as balance sheet size, predict how banks position themselves in the interbank market. This link provides a promising avenue for understanding the formation of financial networks.
Keywords: Interbank market; Banks and banking, Central - Germany;
https://doi.org/10.26509/frbc-wp-201014
Access Documents
File(s):
File format is text/html
https://doi.org/10.26509/frbc-wp-201014
Description: Persistent Link
File(s):
File format is application/pdf
https://www.clevelandfed.org/-/media/project/clevelandfedtenant/clevelandfedsite/publications/working-papers/2010/wp-1014-interbank-tiering-and-money-center-banks-pdf.pdf
Description: Full Text
Authors
Bibliographic Information
Provider: Federal Reserve Bank of Cleveland
Part of Series: Working Papers (Old Series)
Publication Date: 2010
Number: 1014