Overnight interbank markets and the determination of the interbank rate: a selective survey

Research output: Contribution to journalArticlepeer-review

Authors

  • Christopher Green
  • Ye Bai
  • Kethi Ngoka
  • Isaya Maana
  • Samuel Tiriongo

External organisations

  • Loughborough University
  • University of Nottingham
  • Central Bank of Kenya, Kenya

Abstract

Overnight interbank markets provide critical facilities for the banking system to manage, pool and redistribute its cash reserves. We provide a selective survey of the literature on overnight interbank markets. We outline the typical structure of overnight markets, including the networking relationships involved, as an indispensable prerequisite for a clear understanding of the workings of these markets. We review the theoretical and empirical studies on the determination of the overnight rate, and in that context discuss the implications of the 2007–08 financial crisis. We summarise key issues for further research.

Details

Original languageEnglish
Pages (from-to)149-161
JournalInternational Review of Financial Analysis
Volume44
Early online date6 Feb 2016
Publication statusPublished - Mar 2016

Keywords

  • Interbank market, Overnight rate, Bank reserves, Bank liquidity