Freixas, Xavier; Parigi, Bruno M; Rochet, Jean-Charles - In: Journal of Money, Credit and Banking 32 (2000) 3, pp. 611-38
We model systemic risk in an interbank market. Banks face liquidity needs as consumers are uncertain about where they need to consume. Interbank credit lines allow to cope with these liquidity shocks while reducing the cost of maintaining reserves. However, the interbank market exposes the...