Trust key to interbank lending, study finds

Investment and trust

A new study of the Swiss interbank market before and during the financial crisis highlights the reliance of unsecured lending on established relationships – and how quickly these networks of trust collapsed as the crisis hit.

In the paper, published last week in the Journal of Network Theory in Finance, Silvio Schumacher of the Swiss National Bank studied daily transaction-level data on the unsecured and secured Swiss interbank markets. The two sub-markets were organised very differently in the

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