Arbeitspapier
Multiple lending, credit lines and financial contagion
Multiple lending has been widely investigated from both an empirical and a theoretical perspective. Nevertheless, the implications of multiple lending for the stability of the banking system still need to be understood. By lending to a common set of borrowers, banks are interconnected and then exposed to financial contagion phenomena, even if not directly. In this paper, we investigate a specific type of externality that originates from those borrowers that obtain liquidity from more than one bank. In this case, contagion may occur if a bank hit by a liquidity shock calls in some loans and borrowers then pay them back by drawing money from other banks. We show that, under certain circumstances that make other sources of liquidity unavailable or too costly, multiple lending might be responsible for a large liquidity shortage.
- ISBN
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978-92-899-2811-3
- Language
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Englisch
- Bibliographic citation
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Series: ECB Working Paper ; No. 2089
- Classification
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Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Financial Institutions and Services: Government Policy and Regulation
- Subject
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interbank market
financial contagion
systemic risk
multiple lending
credit lines
- Event
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Geistige Schöpfung
- (who)
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Cappelletti, Giuseppe
Mistrulli, Paolo Emilio
- Event
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Veröffentlichung
- (who)
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European Central Bank (ECB)
- (where)
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Frankfurt a. M.
- (when)
-
2017
- DOI
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doi:10.2866/662983
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Cappelletti, Giuseppe
- Mistrulli, Paolo Emilio
- European Central Bank (ECB)
Time of origin
- 2017