Segmented structure of Russian interbank market leads to volatile interest rates
Russia's interbank lending market is segmented with most liquidity-absorbing and liquidity-provision operations conducted by the biggest banks, which reduces credit risk but also restrains market development – thereby building volatility into market interest rates, according to a Bank of Finland discussion paper.
Structural Features and Interest-Rate Dynamics of Russia's Interbank Lending Market, by Alexey Egorov and Olga Kovalenko, finds that interbank lending rate dynamics are determined by
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