Interpersonal versus interbank lending networks: The role of intermediation in risk-sharing

Berlinger, Edina and Gosztonyi, Marton and Havran, Daniel and Pollak, Zoltan (2023) Interpersonal versus interbank lending networks: The role of intermediation in risk-sharing. Emerging Markets Review, 54. ISSN 1566-0141, DOI

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Analyzing the interpersonal lending network of a Hungarian village in a disadvantaged region, we find strong intermediary activity and a tiered core-periphery structure. We show that the main motive behind lending is not altruism or profit-seeking, but risk-sharing which is the most accentuated in poor-to-poor and Roma-to-Roma relations. Comparing this informal lending market to a formal interbank market, we find more similarities than differences. In both markets, intermediation is a key element in risk-sharing and an effective tool to cope with liquidity risk. Regulatory and development policies should respect the existing institutions of risk-sharing.

Item Type: Article
Funders: Higher Education Institutional Excellence Program of the Ministry of Human Capacities (Grant No: NKFIH-1163-10/2019), National Research, Development & Innovation Office (NRDIO) - Hungary (Grant No: K-138826)
Uncontrolled Keywords: Financial exclusion; Liquidity management; Core-periphery; Intermediation; Risk-sharing; Reciprocity
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HF Commerce > Business
H Social Sciences > HG Finance
Divisions: Deputy Vice Chancellor (Academic & International) Office > Asia-Europe Institute
Depositing User: Ms Zaharah Ramly
Date Deposited: 29 Nov 2023 04:16
Last Modified: 29 Nov 2023 04:16

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