BIS: interbank markets are hierarchical
A Bank of International Settlements paper published on Thursday provides evidence that interbank lending market in Germany are tiered, such that banks lend to each other through intermediaries.
Ben Craig and Goetz von Peter, the paper's authors, use Bundesbank data on bilateral interbank exposures for 1,800 banks and develop a core-periphery model to capture the concept of tiering. Craig and von Peter propose that interbank markets are tiered and operate in a hierarchical fashion where lower
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