Systemic Banking Crises: The Relationship Between Concentration and Interbank Connections

61 Pages Posted: 20 Jun 2019

See all articles by Andrea Calef

Andrea Calef

Queen Mary University of London

Date Written: November 16, 2018

Abstract

In this paper I study the extent to which the nexus between concentration and interbank linkages affects financial stability, using data for a sample of 19,689 banks in 69 countries from 1995 to 2014. I find that high levels of interbank exposures decrease the probability of observing a systemic banking crisis, when the banking system is either highly concentrated or fragmented. The relationship between concentration and stability is found to be non-monotonic, as predicted by Martinez-Miera & Repullo (2010), although not U-shaped.

Keywords: Banking, Financial Stability, Interbank, Systemic Risk

JEL Classification: G21, G28

Suggested Citation

Calef, Andrea, Systemic Banking Crises: The Relationship Between Concentration and Interbank Connections (November 16, 2018). Available at SSRN: https://ssrn.com/abstract=3403258 or http://dx.doi.org/10.2139/ssrn.3403258

Andrea Calef (Contact Author)

Queen Mary University of London ( email )

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London, WC2A 3JB
United Kingdom

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