Blasques, Francisco; Bräuning, Falk; Lelyveld, Iman van - Bank for International Settlements (BIS) - 2015
bargain about loan conditions. To reduce credit risk uncertainty, banks can engage in costly peer monitoring of counterparties … particular, peer monitoring and credit risk uncertainty are key factors in the formation of stable interbank lending …. Shocks to credit risk uncertainty can lead to extended periods of low market activity, amplified by a reduction in peer …