Systemic risk, interbank relations and liquidity provision by the Central Bank
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- dc.contributor.author Freixas, Xavier
- dc.contributor.author Parigi, Bruno
- dc.contributor.author Rochet, Jean Charles
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2020-05-25T09:26:54Z
- dc.date.available 2020-05-25T09:26:54Z
- dc.date.issued 1998-10-01
- dc.date.modified 2020-05-25T09:18:25Z
- dc.description.abstract We model systemic risk in an interbank market. Banks face liquidity needs as consumers are uncertain about where they need to consume. Interbank credit lines allow to cope with these liquidity shocks while reducing the cost of maintaining reserves. However, the interbank market exposes the system to a coordination failure (gridlock equilibrium) even if all banks are solvent. When one bank is insolvent, the stability of the banking system is affected in various ways depending on the patterns of payments across locations. We investigate the ability of the banking industry to withstand the insolvency of one bank and whether the closure of one bank generates a chain reaction on the rest of the system. We analyze the coordinating role of the Central Bank in preventing payments systemic repercussions and we examine the justification of the Too-big-to-fail-policy.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=440
- dc.identifier.citation Journal of Money Credit and Banking 32(3, part 2), 611-638, August 2000
- dc.identifier.uri http://hdl.handle.net/10230/774
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 440
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword systemic risk
- dc.subject.keyword central bank
- dc.subject.keyword prudential regulation
- dc.subject.keyword interbank markets
- dc.subject.keyword payment systems
- dc.subject.keyword Finance and Accounting
- dc.title Systemic risk, interbank relations and liquidity provision by the Central Bank
- dc.type info:eu-repo/semantics/workingPaper