Michael Gofman (Rochester)

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Michael Gofman

Finance

A seminar by Michael Gofman from the University of Rochester

Title: Interbank Trading, Collusion, and Financial Regulation

Abstract: We show theoretically and empirically that interbank markets provide a channel for banks to collude in the market for business loans. By lending funds to a competitor, a bank commits not to compete. Interbank interest rates allow banks to split the benefits from such collusion. Using global syndicated loans data, we find that firms paid 31bps higher spread on $239 billion of loans provided by banks that took an interbank loan from a competitor. We compare the decentralized solution with interbank market to the planner’s solution and to the decentralized equilibrium without interbank market. The results suggest that restricting interbank trading may increase aggregate welfare.

Start date:

11am Monday, 3 Jun 2019

End date:

12.30pm Monday, 3 Jun 2019

Venue:

CBE LT2

Presenter(s):

Michael Gofman

Updated:   28 May 2019 / Responsible Officer:  CBE Communications and Outreach / Page Contact:  College Web Team