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Significant ties: Identifying relationship lending in temporal interbank networks

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  • Teruyoshi Kobayashi

    (Graduate School of Economics, Kobe University)

  • Taro Takaguchi

    (National Institute of Information and Communication Technology)

Abstract

Relationship lending is conventionally interpreted as a strong partnership between a lender and a borrower. Nevertheless, we still lack consensus regarding how to quantify a lending relationship while simple statistics such as the frequency and volume of loans have been frequently used. Here, we propose the concept of a significant tie to statistically evaluate the strength of a relationship. Application of the proposed method to the Italian interbank networks reveals that the percentage of relationship lending among all bilateral trades is consistently around 20%-30% and that their trading properties are distinct from those of transactional trades.

Suggested Citation

  • Teruyoshi Kobayashi & Taro Takaguchi, 2017. "Significant ties: Identifying relationship lending in temporal interbank networks," Discussion Papers 1717, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:1717
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    File URL: http://www.econ.kobe-u.ac.jp/RePEc/koe/wpaper/2017/1717.pdf
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    References listed on IDEAS

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    Cited by:

    1. Kobayashi, Teruyoshi & Takaguchi, Taro, 2018. "Identifying relationship lending in the interbank market: A network approach," Journal of Banking & Finance, Elsevier, vol. 97(C), pages 20-36.
    2. Teruyoshi Kobayashi & Anna Sapienza & Emilio Ferrara, 2018. "Extracting the multi-timescale activity patterns of online financial markets," Discussion Papers 1809, Graduate School of Economics, Kobe University.

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