Arbeitspapier

Peer Monitoring vs. search costs in the interbank market: Evidence from payment flow data in Norway

Bilateral payment flows between banks may provide private information about a borrowing bank's liquidity position. This paper analyses whether private information on the bilateral payment flow of central bank reserves foster peer monitoring or whether the information is used to reduce search costs in the unsecured interbank market. In the former, banks with outflows of liquidity are penalized by their counterparties, while in the latter, these banks benefit through reduced search costs to find a liquidity provider. I use data from Norges Bank's real time gross settlement system over the period 2012 to 2015 to identify unsecured overnight interbank loans and payment flows. The results suggest that banks are using private information from payment flows to reduce search costs and not for peer monitoring. This has important implications for regulators' assessment of the pros and cons of a centralized versus a decentralized interbank market.

ISBN
978-82-8379-193-8
Sprache
Englisch

Erschienen in
Series: Working Paper ; No. 2/2021

Klassifikation
Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems
Interest Rates: Determination, Term Structure, and Effects
Central Banks and Their Policies
Thema
Peer monitoring
search cost
unsecured overnight interbank market
interest rates
central bank liquidity policy and OTC markets

Ereignis
Geistige Schöpfung
(wer)
Findreng, Jon H.
Ereignis
Veröffentlichung
(wer)
Norges Bank
(wo)
Oslo
(wann)
2021

Handle
Letzte Aktualisierung
10.03.2025, 11:45 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Findreng, Jon H.
  • Norges Bank

Entstanden

  • 2021

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