Interpersonal versus interbank lending networks: The role of intermediation in risk-sharing
Document Type
Article
Publication Date
3-1-2023
Abstract
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.
Keywords
Financial exclusion, Liquidity management, Core-periphery, Intermediation, Risk-sharing, Reciprocity
Divisions
aei
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)
Publication Title
Emerging Markets Review
Volume
54
Publisher
Elsevier
Publisher Location
RADARWEG 29, 1043 NX AMSTERDAM, NETHERLANDS