Interbank Lending Games
arXiv:2602.15186v1 Announce Type: new Abstract: We define and study a lending game to model the interbank money market, in which lending banks strategically allocate their cash to borrowing banks. The interest rate offered by each borrowing bank is within the interest rate corridor set by the central bank and ultimately depends on the demand and the supply of cash in the interbank market. Lending banks naturally aim to maximise the income coming from the interest repayments. In its […]