IDEAS home Printed from https://ideas.repec.org/a/eme/sefpps/sef-10-2018-0310.html
   My bibliography  Save this article

The interbank payment network and financial system stability

Author

Listed:
  • Imaduddin Sahabat
  • Tumpak Silalahi
  • Ratih Indrastuti
  • Marizsa Herlina

Abstract

Purpose - The financial turbulence resulting from the global financial crisis sparked the interest in improving understanding of financial risks. The transmission of financial institution failures can be determined from the prevailing network structures between banks. The purpose of this study is to identify relationship between payment system network characteristics and financial system condition. Design/methodology/approach - The characteristics of the interbank network structure in the payment system are identified using a graph theory and the relationship between the network characteristics of interbank transactions in the payment system and financial system stability is examined using a vector auto regression model. Findings - This study shows that the connectedness of large-value payment transaction is more segmented compared to that of retail value payments. A significant relationship is observed between the characteristics of the network and the large-value payment transactions. Research limitations/implications - This study found the connectedness of large-value transactions is more segmented when compared to retail-value transactions. It also shows a causal effect of the network characteristic on the financial system stability. Originality/value - Unlike existing studies, this study considers both the connectedness in large-value transactions and retail-value transactions.

Suggested Citation

  • Imaduddin Sahabat & Tumpak Silalahi & Ratih Indrastuti & Marizsa Herlina, 2019. "The interbank payment network and financial system stability," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 37(1), pages 1-17, September.
    • Handle: RePEc:eme:sefpps:sef-10-2018-0310
    DOI: 10.1108/SEF-10-2018-0310
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/SEF-10-2018-0310/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/SEF-10-2018-0310/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/SEF-10-2018-0310?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Network structure; Financial system stability; Interbank payments; Large-value payment; Retail payment; Global finance crisis; A12; C45; C55; D85; L14;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:sefpps:sef-10-2018-0310. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.