Transparency in the Interbank Market and the Volume of Bank Intermediated Loans

Arbeitspapier

In this paper we study the impact of more transparency in the interbank market on the volume of bank intermediated loans and on the profitability of the banking business. Transparency is modeled by means of the informational content of publicly observable signals correlated to the random interbank interest rate. We find that more transparency may increase or decrease the volume of bank loans. In particular, the impact of more transparency on the volume of loans depends on the curvature of the marginal cost function of the banking firm. Furthermore, we find that ex ante expected profits of the bank are higher when the interbank market is more transparent.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Dresden Discussion Paper Series in Economics ; No. 10/04

Classification and Topics

• Classification: Wirtschaft ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages
• Subject: banking firm ; interbank market ; interest rate risk ; hedging ; transparency ; Geldmarkt ; Informationseffizienz ; Kreditgeschäft ; Umsatz ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Broll, Udo ; Eckwert, Bernhard
• Event: Veröffentlichung
• (who): Technische Universität Dresden, Fakultät Wirtschaftswissenschaften
• (where): Dresden
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/22714
• Last update: 10.03.2025, 11:43 AM CET