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Interpersonal versus interbank lending networks: The role of intermediation in risk-sharing

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  • Berlinger, Edina
  • Gosztonyi, Márton
  • Havran, Dániel
  • Pollák, Zoltán

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.

Suggested Citation

  • Berlinger, Edina & Gosztonyi, Márton & Havran, Dániel & Pollák, Zoltán, 2023. "Interpersonal versus interbank lending networks: The role of intermediation in risk-sharing," Emerging Markets Review, Elsevier, vol. 54(C).
    • Handle: RePEc:eee:ememar:v:54:y:2023:i:c:s1566014122001066
    DOI: 10.1016/j.ememar.2022.100989
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    More about this item

    Keywords

    Financial exclusion; Liquidity management; Core-periphery; Intermediation; Risk-sharing; Reciprocity;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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