Bundesbank paper investigates how relationships impact interbank lending
A discussion paper published by the Deutsche Bundesbank on September 7, finds established relationships are important in determining the amount and price of credit in the interbank market.
The authors, Falk Bräuning and Falko Fecht, say banks are more likely to receive a loan from a particular lender they have often borrowed from in the past, and if a larger portion of their borrowing comes from that lender.
As such, the relationships between banks determine the availability of credit and how it
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